Investing In Stock Markets

Why Invest in Stock Markets

Historically on a long term horizon equities have given higher return than other asset classes

Source wwwrbiorgin

Basics of the Stock Market

Stocks It is a term used to symbolize an investorrsquos ownership of a company

Stock Market It is the place where buying amp selling of these shares happen (also known as stock Exchanges)

(Issues in Market Design )

Primary security markets where new issues of securities are initially sold

Secondary A market where securities are resold Eg the NSE

Basics of the Stock Market

Face Value

Market Value

Dividend

Bonus Shares

Market Capitalization Noof outstanding shares X Current Market Price

Small Cap Market Capitalization less than 75 crores

(High Risk high returns )

Mid Cap Market Capitalization between 75 to 7500 crores

(Medium Risk Medium Returns)

Large Cap Market Capitalization more than 7500 Crores

( Low Risk Low returns )

Classification of Shares

The Trading ProcessThe elements of the trading process can be divided into 4 components

Information

Order routing

Execution

Clearing

Some Issues in Stock market design

The way the market is designed will affect what type of traders participate the overall trading process and the behaviour of prices

2 factors to consider

Transparency

Automation

Information Bid Price

Ask Price

Volume

Percentage Change

Day High Day Low

Types of Orders

Market Orders Most common type of order placed by an investoron the NSE It is an order to buy or sell at the best

price currentlyavailable

Limit Orders This is an order to buysell at a maximumminimum price These orders control the price paid or

received but investor has no way of knowing when the order will be filled

Delivery orders Trades for which the investor takes or gives delivery of shares depending upon the trade he has entered into

IntraDay Orders Trades which have to be squared off on the very same day

Types of Orders

Market Participants Regulators

Exchanges

Brokers

Depository Participants

Investors Clients

Online Trading

Aims at converting the Open Outcry system of trading to a screen based trading system

Now what is Online Trading

Buying ampSelling of stocks options bonds and other financial instruments using online brokerrsquos web sites and systems

Management guru Tom Peters distance is dead

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Why Invest in Stock Markets

Historically on a long term horizon equities have given higher return than other asset classes

Source wwwrbiorgin

Basics of the Stock Market

Stocks It is a term used to symbolize an investorrsquos ownership of a company

Stock Market It is the place where buying amp selling of these shares happen (also known as stock Exchanges)

(Issues in Market Design )

Primary security markets where new issues of securities are initially sold

Secondary A market where securities are resold Eg the NSE

Basics of the Stock Market

Face Value

Market Value

Dividend

Bonus Shares

Market Capitalization Noof outstanding shares X Current Market Price

Small Cap Market Capitalization less than 75 crores

(High Risk high returns )

Mid Cap Market Capitalization between 75 to 7500 crores

(Medium Risk Medium Returns)

Large Cap Market Capitalization more than 7500 Crores

( Low Risk Low returns )

Classification of Shares

The Trading ProcessThe elements of the trading process can be divided into 4 components

Information

Order routing

Execution

Clearing

Some Issues in Stock market design

The way the market is designed will affect what type of traders participate the overall trading process and the behaviour of prices

2 factors to consider

Transparency

Automation

Information Bid Price

Ask Price

Volume

Percentage Change

Day High Day Low

Types of Orders

Market Orders Most common type of order placed by an investoron the NSE It is an order to buy or sell at the best

price currentlyavailable

Limit Orders This is an order to buysell at a maximumminimum price These orders control the price paid or

received but investor has no way of knowing when the order will be filled

Delivery orders Trades for which the investor takes or gives delivery of shares depending upon the trade he has entered into

IntraDay Orders Trades which have to be squared off on the very same day

Types of Orders

Market Participants Regulators

Exchanges

Brokers

Depository Participants

Investors Clients

Online Trading

Aims at converting the Open Outcry system of trading to a screen based trading system

Now what is Online Trading

Buying ampSelling of stocks options bonds and other financial instruments using online brokerrsquos web sites and systems

Management guru Tom Peters distance is dead

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Source wwwrbiorgin

Basics of the Stock Market

Stocks It is a term used to symbolize an investorrsquos ownership of a company

Stock Market It is the place where buying amp selling of these shares happen (also known as stock Exchanges)

(Issues in Market Design )

Primary security markets where new issues of securities are initially sold

Secondary A market where securities are resold Eg the NSE

Basics of the Stock Market

Face Value

Market Value

Dividend

Bonus Shares

Market Capitalization Noof outstanding shares X Current Market Price

Small Cap Market Capitalization less than 75 crores

(High Risk high returns )

Mid Cap Market Capitalization between 75 to 7500 crores

(Medium Risk Medium Returns)

Large Cap Market Capitalization more than 7500 Crores

( Low Risk Low returns )

Classification of Shares

The Trading ProcessThe elements of the trading process can be divided into 4 components

Information

Order routing

Execution

Clearing

Some Issues in Stock market design

The way the market is designed will affect what type of traders participate the overall trading process and the behaviour of prices

2 factors to consider

Transparency

Automation

Information Bid Price

Ask Price

Volume

Percentage Change

Day High Day Low

Types of Orders

Market Orders Most common type of order placed by an investoron the NSE It is an order to buy or sell at the best

price currentlyavailable

Limit Orders This is an order to buysell at a maximumminimum price These orders control the price paid or

received but investor has no way of knowing when the order will be filled

Delivery orders Trades for which the investor takes or gives delivery of shares depending upon the trade he has entered into

IntraDay Orders Trades which have to be squared off on the very same day

Types of Orders

Market Participants Regulators

Exchanges

Brokers

Depository Participants

Investors Clients

Online Trading

Aims at converting the Open Outcry system of trading to a screen based trading system

Now what is Online Trading

Buying ampSelling of stocks options bonds and other financial instruments using online brokerrsquos web sites and systems

Management guru Tom Peters distance is dead

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Basics of the Stock Market

Stocks It is a term used to symbolize an investorrsquos ownership of a company

Stock Market It is the place where buying amp selling of these shares happen (also known as stock Exchanges)

(Issues in Market Design )

Primary security markets where new issues of securities are initially sold

Secondary A market where securities are resold Eg the NSE

Basics of the Stock Market

Face Value

Market Value

Dividend

Bonus Shares

Market Capitalization Noof outstanding shares X Current Market Price

Small Cap Market Capitalization less than 75 crores

(High Risk high returns )

Mid Cap Market Capitalization between 75 to 7500 crores

(Medium Risk Medium Returns)

Large Cap Market Capitalization more than 7500 Crores

( Low Risk Low returns )

Classification of Shares

The Trading ProcessThe elements of the trading process can be divided into 4 components

Information

Order routing

Execution

Clearing

Some Issues in Stock market design

The way the market is designed will affect what type of traders participate the overall trading process and the behaviour of prices

2 factors to consider

Transparency

Automation

Information Bid Price

Ask Price

Volume

Percentage Change

Day High Day Low

Types of Orders

Market Orders Most common type of order placed by an investoron the NSE It is an order to buy or sell at the best

price currentlyavailable

Limit Orders This is an order to buysell at a maximumminimum price These orders control the price paid or

received but investor has no way of knowing when the order will be filled

Delivery orders Trades for which the investor takes or gives delivery of shares depending upon the trade he has entered into

IntraDay Orders Trades which have to be squared off on the very same day

Types of Orders

Market Participants Regulators

Exchanges

Brokers

Depository Participants

Investors Clients

Online Trading

Aims at converting the Open Outcry system of trading to a screen based trading system

Now what is Online Trading

Buying ampSelling of stocks options bonds and other financial instruments using online brokerrsquos web sites and systems

Management guru Tom Peters distance is dead

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Basics of the Stock Market

Face Value

Market Value

Dividend

Bonus Shares

Market Capitalization Noof outstanding shares X Current Market Price

Small Cap Market Capitalization less than 75 crores

(High Risk high returns )

Mid Cap Market Capitalization between 75 to 7500 crores

(Medium Risk Medium Returns)

Large Cap Market Capitalization more than 7500 Crores

( Low Risk Low returns )

Classification of Shares

The Trading ProcessThe elements of the trading process can be divided into 4 components

Information

Order routing

Execution

Clearing

Some Issues in Stock market design

The way the market is designed will affect what type of traders participate the overall trading process and the behaviour of prices

2 factors to consider

Transparency

Automation

Information Bid Price

Ask Price

Volume

Percentage Change

Day High Day Low

Types of Orders

Market Orders Most common type of order placed by an investoron the NSE It is an order to buy or sell at the best

price currentlyavailable

Limit Orders This is an order to buysell at a maximumminimum price These orders control the price paid or

received but investor has no way of knowing when the order will be filled

Delivery orders Trades for which the investor takes or gives delivery of shares depending upon the trade he has entered into

IntraDay Orders Trades which have to be squared off on the very same day

Types of Orders

Market Participants Regulators

Exchanges

Brokers

Depository Participants

Investors Clients

Online Trading

Aims at converting the Open Outcry system of trading to a screen based trading system

Now what is Online Trading

Buying ampSelling of stocks options bonds and other financial instruments using online brokerrsquos web sites and systems

Management guru Tom Peters distance is dead

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Small Cap Market Capitalization less than 75 crores

(High Risk high returns )

Mid Cap Market Capitalization between 75 to 7500 crores

(Medium Risk Medium Returns)

Large Cap Market Capitalization more than 7500 Crores

( Low Risk Low returns )

Classification of Shares

The Trading ProcessThe elements of the trading process can be divided into 4 components

Information

Order routing

Execution

Clearing

Some Issues in Stock market design

The way the market is designed will affect what type of traders participate the overall trading process and the behaviour of prices

2 factors to consider

Transparency

Automation

Information Bid Price

Ask Price

Volume

Percentage Change

Day High Day Low

Types of Orders

Market Orders Most common type of order placed by an investoron the NSE It is an order to buy or sell at the best

price currentlyavailable

Limit Orders This is an order to buysell at a maximumminimum price These orders control the price paid or

received but investor has no way of knowing when the order will be filled

Delivery orders Trades for which the investor takes or gives delivery of shares depending upon the trade he has entered into

IntraDay Orders Trades which have to be squared off on the very same day

Types of Orders

Market Participants Regulators

Exchanges

Brokers

Depository Participants

Investors Clients

Online Trading

Aims at converting the Open Outcry system of trading to a screen based trading system

Now what is Online Trading

Buying ampSelling of stocks options bonds and other financial instruments using online brokerrsquos web sites and systems

Management guru Tom Peters distance is dead

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

The Trading ProcessThe elements of the trading process can be divided into 4 components

Information

Order routing

Execution

Clearing

Some Issues in Stock market design

The way the market is designed will affect what type of traders participate the overall trading process and the behaviour of prices

2 factors to consider

Transparency

Automation

Information Bid Price

Ask Price

Volume

Percentage Change

Day High Day Low

Types of Orders

Market Orders Most common type of order placed by an investoron the NSE It is an order to buy or sell at the best

price currentlyavailable

Limit Orders This is an order to buysell at a maximumminimum price These orders control the price paid or

received but investor has no way of knowing when the order will be filled

Delivery orders Trades for which the investor takes or gives delivery of shares depending upon the trade he has entered into

IntraDay Orders Trades which have to be squared off on the very same day

Types of Orders

Market Participants Regulators

Exchanges

Brokers

Depository Participants

Investors Clients

Online Trading

Aims at converting the Open Outcry system of trading to a screen based trading system

Now what is Online Trading

Buying ampSelling of stocks options bonds and other financial instruments using online brokerrsquos web sites and systems

Management guru Tom Peters distance is dead

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Some Issues in Stock market design

The way the market is designed will affect what type of traders participate the overall trading process and the behaviour of prices

2 factors to consider

Transparency

Automation

Information Bid Price

Ask Price

Volume

Percentage Change

Day High Day Low

Types of Orders

Market Orders Most common type of order placed by an investoron the NSE It is an order to buy or sell at the best

price currentlyavailable

Limit Orders This is an order to buysell at a maximumminimum price These orders control the price paid or

received but investor has no way of knowing when the order will be filled

Delivery orders Trades for which the investor takes or gives delivery of shares depending upon the trade he has entered into

IntraDay Orders Trades which have to be squared off on the very same day

Types of Orders

Market Participants Regulators

Exchanges

Brokers

Depository Participants

Investors Clients

Online Trading

Aims at converting the Open Outcry system of trading to a screen based trading system

Now what is Online Trading

Buying ampSelling of stocks options bonds and other financial instruments using online brokerrsquos web sites and systems

Management guru Tom Peters distance is dead

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Information Bid Price

Ask Price

Volume

Percentage Change

Day High Day Low

Types of Orders

Market Orders Most common type of order placed by an investoron the NSE It is an order to buy or sell at the best

price currentlyavailable

Limit Orders This is an order to buysell at a maximumminimum price These orders control the price paid or

received but investor has no way of knowing when the order will be filled

Delivery orders Trades for which the investor takes or gives delivery of shares depending upon the trade he has entered into

IntraDay Orders Trades which have to be squared off on the very same day

Types of Orders

Market Participants Regulators

Exchanges

Brokers

Depository Participants

Investors Clients

Online Trading

Aims at converting the Open Outcry system of trading to a screen based trading system

Now what is Online Trading

Buying ampSelling of stocks options bonds and other financial instruments using online brokerrsquos web sites and systems

Management guru Tom Peters distance is dead

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Types of Orders

Market Orders Most common type of order placed by an investoron the NSE It is an order to buy or sell at the best

price currentlyavailable

Limit Orders This is an order to buysell at a maximumminimum price These orders control the price paid or

received but investor has no way of knowing when the order will be filled

Delivery orders Trades for which the investor takes or gives delivery of shares depending upon the trade he has entered into

IntraDay Orders Trades which have to be squared off on the very same day

Types of Orders

Market Participants Regulators

Exchanges

Brokers

Depository Participants

Investors Clients

Online Trading

Aims at converting the Open Outcry system of trading to a screen based trading system

Now what is Online Trading

Buying ampSelling of stocks options bonds and other financial instruments using online brokerrsquos web sites and systems

Management guru Tom Peters distance is dead

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Delivery orders Trades for which the investor takes or gives delivery of shares depending upon the trade he has entered into

IntraDay Orders Trades which have to be squared off on the very same day

Types of Orders

Market Participants Regulators

Exchanges

Brokers

Depository Participants

Investors Clients

Online Trading

Aims at converting the Open Outcry system of trading to a screen based trading system

Now what is Online Trading

Buying ampSelling of stocks options bonds and other financial instruments using online brokerrsquos web sites and systems

Management guru Tom Peters distance is dead

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Market Participants Regulators

Exchanges

Brokers

Depository Participants

Investors Clients

Online Trading

Aims at converting the Open Outcry system of trading to a screen based trading system

Now what is Online Trading

Buying ampSelling of stocks options bonds and other financial instruments using online brokerrsquos web sites and systems

Management guru Tom Peters distance is dead

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Online Trading

Aims at converting the Open Outcry system of trading to a screen based trading system

Now what is Online Trading

Buying ampSelling of stocks options bonds and other financial instruments using online brokerrsquos web sites and systems

Management guru Tom Peters distance is dead

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Now what is Online Trading

Buying ampSelling of stocks options bonds and other financial instruments using online brokerrsquos web sites and systems

Management guru Tom Peters distance is dead

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

How is it Done Online trading can be done through

A Trading Platform ( Software )

Brokerrsquos Website

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Why trade online

In a market where every second counts you have to constantly be up to speed

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

OBJECTIVESOF ON LINE TRADING

Leads to transparent deals in the market

Improves liquidity in the market

Increases the market depth through quote-continuity

Instantaneous dissemination of information through channels

Structured MIS reports for analysis

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Service Providers in India Brokerage Houses

Sharekhan

5paisacom

Indiabulls

Angel Broking

Financial institutions

ICICIDirect

HDFC Securities

IDBI Capital

Kotak Securities

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Getting Started

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Starting up Evaluate the Brokers

Select the best broker

Open a Demat Ac amp Trading Ac with the broker

Open a savings Bank Ac which is linked with the Broker

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

DEMAT ACCOUNT Dematerialized account

Approach the DP

Must for trading and investing

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Scenario 1 ndash 3 Entities for D T S

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac

9th Jan Shares Come to your demat Ac

( T + 2 )

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Scenario 2 ndash 2 Entities ndash DT ndash S(nl)

Date Particulars

1st Jan Give cheque to the broker

3rd Jan Money comes to your account

5th Jan Shares come in your trading Ac (same day transferred to demat Ac)

( T + 2 )

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Scenario 3 ndash 2 Entities ndash DT ndashS (l)

Date Particulars

1st Jan Give an online instruction money comes in your trading Ac You purchase the share that day itself

3rd Jan Shares come in your trading Ac (same day transferred to demat Ac)You may sell the shares off on the same day

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Investor

HDFC Bank(Savings ac)SHAREKHAN

(Demat ac)

Puts BUY order on

wwwsharekhancom

SHAREKHAN

Savings account Balance

checked amp blocked Contract note is sent through E-mail

Buy order executed amp

Savings ac debited

Shares credited on T+2 day

SHAREKHAN

(Trading ac)

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

YOUR SAVINGS ACYOUR SAVINGS AC

TRADING AC WITH BROKER

TRADING AC WITH BROKER

YOUR DP ACYOUR DP AC

MONEY COMES IN

PURCHASE SHARES

SHARES TRANSFERREDINTO DEMAT AC

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Documents Required

Photo ID Proof - Election Card Driving Licence PAN

Residence Proof ndash Ration Card MTNL bill Electricity bill

Bank Ac proof (Statement)

PAN Card - MUST

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Comparative analysis of broking firms

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Comparative Analysis of different Broking Firms

Following Broking Firms are taken for the purpose of comparative analysis -

bullKotak Securities

bullSharekhan

bullIDBI paisa builder

bullIndia Bulls

bullHDFC Securities

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Parameters Used

Parameters Used Weightage given

Portal 30Brokerage 30

Range of services offered (BSE NSE FampO Commodities PMS Etc)

20

Customer service 20Total 100

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

1st Parameter - Quality of Portal

USER FRIENDLINESSName of the Firm Ranking Scores Total Weighted score

(Scores 30)

Kotak Securities 4th 40 12Sharekhan 2nd 80 24

IDBI paisa builder

1st 100 30

India Bulls 5th 20 6HDFC

Securities2nd 80 24

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

2nd Parameter - Brokerage Charged

Name of the Firm Ranking Scores Total Weighted score(Scores 30)

Kotak Securities 3rd 60 18Sharekhan 2nd 80 24

IDBI paisa builder 2nd 80 24

India Bulls 1st 100 30HDFC Securities 2rd 80 24

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

3rd Parameter - Range of

Services Offered

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 3rd 60 12Sharekhan 2nd 80 16

IDBI paisa builder

3rd 60 12

India Bulls 4th 40 08HDFC Securities 1st 100 20

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

4th Parameter - Customer Services

Name of the Firm Ranking Scores Total Weighted score(Scores 20)

Kotak Securities 2nd 80 16Sharekhan 1st 100 20

IDBI paisa builder

4th 40 08

India Bulls 3rd 60 12HDFC Securities 1st 80 16

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE

FIRMS

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Name of the firm

Weighted Score on Portal

Weighted Score on Brokerage

Weighted Score on Range of Services

Weighted Score on Customer Services

Total Weighted score

Relative Ranking

Kotak Securities

12 18 12 16 58 3rd

Sharekhan 24 24 16 20 84 1st

IDBI paisa builder

30 24 12 08 74 2nd

India Bulls 6 30 08 12 56 4th HDFC Securities

24 24 20 16 84 1st

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

What is a Depository

lsquohellipa facility for holding securities which enables securities transactions to be processed by book entryrsquo

Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records)

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Depositories in IndiaCDSL

The Stock Exchange ndash Mumbai (BSE) Bank of India Bank of Baroda State Bank of India HDFC Bank Standard Chartered Bank Global Trust Bank Union Bank of India Centurion Bank Bank of Maharashtra The Calcutta Stock Exchange Association Ltd

NSDLbull Industrial Development Bank of Indiabull Unit Trust of Indiabull The National Stock Exchange of Indiabull State Bank of Indiabull Global Trust Bank Limitedbull Citibank NAbull Standard Chartered Bankbull HDFC Bank Limitedbull The Hong Kong and Shanghai Banking Corporation Limitedbull Deutsche Bankbull Dena Bankbull Canara Bank

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

REGULATOR OF THE MARKEThellip

SEBI - Protecting the interest of the

investors

Promoting and developing securities market

regulation of securities market

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Exchanges 28 exchanges in India

Major exchanges are

1 NSE2 BSE

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Welcome to a NEW INDIA

infinReal GDP Growth 65 to 75infinInflation estimates at ~ 5infinNominal GDP Growth at 125infinCorporate earnings growth at 15 ndash18

India ndashAn Investment Opportunity

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

infinCapital expenditure ndashTo growbullIIP(Industrial Index of Production) Growth to pick up again will need capacity expansion hellipbullStrong order book log improves revenue visibilityinfinConsumption ndashTo get stimulibullPer capita income has grown by 7 CAGR over the past decade positive demographicsbullRising aspiration availability and affordability of IndiansinfinCompetitiveness ndashAdds business confidencebullCompelling and sustainable Cost and Skill advantagebullBrand India gaining more acceptability globallyinfinContinuation of structural reformsbullVAT ndasha good beginning abolition of LTCG( Long Term Capital Gains ) in equitybullThrust on infrastructure creationbullPolitical will to push reforms despite resistance

Fundamentals ldquo4 Crdquo Effect

Welcome to a NEW INDIA

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Liquidity More to come

infin Indian households are under-invested in equity thanks to high interest rate regime in the pastinfin Cumulative FII holdings in India ~ 40bnUSD against total FII stocks globally ~ 35trUSD India still not rated as an investment gradeinfin More domestic institutional funds to come ndashInsurance Pension Funds AMCs etcinfin Long term global investors like pension funds and institutional trusts also have started participating in ldquoOpportunity Indiardquo

India ndashAn Investment Opportunity

Welcome to a NEW INDIA

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

infin India has come a long way ndashfrom near bankruptcy in early 90rsquos to being

one of the fastest growing economy in the world

infin 64 of Indiarsquos GDP is consumption-led providing sustainability to

economic growth

infin Average EPS growth rate of Sensex companies over the last 5 years

18 CAGR

infin Healthy balance sheet and operating efficiency ndashimproved capacity

utilisation cash up debt equity down growing profitability

India ndashAn Investment OpportunityValuation Supported by Earnings

Welcome to a NEW INDIA

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

infin GDP growth to remain strong

infin Changing lifestyle to boost consumption

infin Capital spend to lead to increased demand for capital goods

infin Continuation of structural reforms

infin FDI to be more relaxed

infin Market cap GDP ratio still low

infin Liquidity to continue

infin Valuations ndashFair but not stretched

Way AheadIndia ndashAn Investment Opportunity

Welcome to a NEW INDIA

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Concernsbull Expectation of high Interest Ratesbull Expectation of high Oil Pricesbull High Fiscal and Current Account Deficitsbull Geopolitical Tensions

bull Possibility of Liquidity Withdrawalsbull 1048707Reduction in leveraged positionsbull 1048707Flight to non-risky assets

bull Huge Volatility ndashA Key Deterrent

Case for Investing

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

bull Should we invest in equitybull If lsquoin-the marketrsquo possibility of capital lossbull If lsquoout-of the marketrsquo possibility of opportunity

loss

Capital Loss

vs

Opportunity Loss

Dilemma

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

HOW MUCH SHOULD YOU EARN

bull TO FIGHT INFLATION - 6

bull BANK INTEREST ndash 7

bull Hence you have to earn 13 just to stay afloat

bull Your real gain is the extra that you earn above 13 Equities gives you atleast 18 ndash 25 on a conservative estimate(Moneylender calculation)

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Must be DRIVEN BY

bull Your Financial Goals

amp

bull Your Risk Appetite

Hence Time Rate of Return amp Risk

ASSET ALLOCATION DECISION

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Success of any Investment

bull Longevity

bull Growth

bull Quality of Growth

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

ie Which Stocks

1 External Opportunities

2 Sustainable Competitive Ability

3 Scalability and Operating Leverage

4 Management Quality and Capital efficiency

5 Price and Value Divergence( What we buy and at what price we buy )

What to Invest In

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

What options do we have today

bull Investment with Limited Understanding and many uncertaintiesbull Sobull Our entry pricing must give us a margin of safetybull Reduce LOSS and EXTENT OF LOSSbull LONG TERM rather than SHORT TERM

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

WHY INDIA

bull INDIA is a confluence of CAPITAL EXPENDITURE and CONSUMPTION CYCLE in INDIA is the highest

bull One of the several booming sectors therefore are FMCG Power Construction and Engineering sector (infra)

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

When INVESTING

bull Place greater emphasis on Superior Business Models rather than sectors for investing decisions

bull An Entrepreneur makes an invaluable difference to the investment returns

bull Eg INFOSYS ADITYA BIRLA NUVOBIOCON BHEL

bull Recognise the passion and the skills of the entrepreneur and then believe in the VISION and BELIEFS of the entrepreneur and above all VALIDATE THE RISKS that may or may not have been perceived by the entrepreneur

bull Understand the broad drivers of PROFIT amp GROWTH

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Drivers for Indian Equities

bull Earnings Momentumbull Re-Rating Potential

bull Lack of Investment alternatives for Indiarsquos growing Savings

bull Larger Aspirations

bull Rising Risk Appetitebull Equity Participation by Indian amp Foreign Investors is still at a fairly nascent

stagebull Equity Valuations are still far away from their Peak Valuations

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

To Summarise

bull Superior Investment Returns are from a combination of

WISDOM and PATIENCE

rather than

INTELLECT amp EXPECTATIONS of QUICK amp HIGH RETURNS

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

USUAL BUY Strategies

bull INTRA DAY ndash Buy in the morning when the market opens or during the day BUT selling it before the close of trading hours ON THE SAME DAY

( 955am to 330pm)bull Two options (1) BUY - SELL ----Buy at LCL amp Sell at UCL (2) SHORTSELL ndash SELL at a High Price in anticipation of a drop in price as the day goes along ie Stock Opens at Higher Level ndash SHORTSELL and then BUY at LOWER LEVELS by the AFTERNOON

bull INFORMATION With YOU from a RELIABLE Sourcebull NEWS tickers on NEWS Channels investment bankers brokers

bull ON DELIVERY BASIS

bull Short term bull Long term

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

For Income Tax Purposes

bull On Long term gains ndash NIL Tax

bull On Short term gains ndash 10 income tax

bull On Day Trades gains ndash The gains are added to your gross income and subjected to tax( Treated as Business Income )

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

JBA

There was a one hour interview on

CNBC with Warren Buffet the second

richest man who has donated $31 billion

to charity Following are some very

interesting aspects of his life

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

JBA

1He bought his first share at age 11 and he now regrets that he started too late

Things were very cheap that time Encourage your children to invest

2He bought a small farm at age 14 with savings from delivering newspapers

One could have bought many things with little savings

Encourage your children to start some kind of business

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

JBA

3He still lives in the same small 3-bedroom

house in mid-town Omaha that he bought

after he got married 50 years ago He says

that he has everything he needs in that

house His house does not have a wall or a

fence

Dont buy more than what you really need and encourage your children to do and think the same

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

JBA

4He drives his own car everywhere and does not have a driver or security people around him

You are what you are

5He never travels by private jet although he owns the worlds largest private jet company

Always think how you can accomplish things economically

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

JBA

6His company Berkshire Hathaway owns 63

companies He writes only one letter each

year to the CEOs of these companies giving

them goals for the year He never holds

meetings or calls them on a regular basis

Assign the right people to the right jobs

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

JBA

7He has given his CEOs only two rules

Rule number 1 do not lose any of your share

holders money

Rule number 2 Do not forget rule number 1

Set goals and make sure people focus on

them

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

JBA

8He does not socialize with the high society crowd His past time after he gets home is to make himself some pop corn and watch Television

Dont try to show off just be your self and do what you enjoy doing

9Warren Buffet does not carry a cell phone

nor has a computer on his desk

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

JBA

9Bill Gates the worlds richest man met him

for the first time only 5 years ago Bill Gates

did not think he had anything in common

with Warren Buffet So he had scheduled

his meeting only for half hour But when

Gates met him the meeting lasted for ten

hours and Bill Gates became a devotee of

Warren Buffet

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

JBA

His advice to young people

Stay away from credit cards (bank loans) and invest

in yourself and Remember

A Money doesnt create man but it is the man who

created money

B Live your life as simple as you are

C Dont do what others say just listen them but

do what you feel good

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

JBA

D Dont go on brand name just wear those

things in which you feel comfortable

E Dont waste your money on unnecessary

things just spend on them who really in

need rather

F After all its your life then why give chance

to others to rule our life

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

JBA

Buffetrsquos maxims for future guidance (2009)

bull Hard work All hard work bring a profit but mere talk leads only to poverty

bull Laziness A sleeping lobster is carried away by the water current

bull Earnings Never depend on a single source of income [At least make your Investments get you second earning]

bull Spending If you buy things you dont need youll soon sell things you need

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

JBA

bull Savings Dont save what is left after spending Spend what is left after saving

bull Borrowings The borrower becomes the lenders slave Accounting Its no use carrying an umbrella if your shoes are leaking

bull Auditing Beware of little expenses A small leak can sink a large ship

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

JBA

bull Risk-taking Never test the depth of the river with both feet [Have an alternate plan ready]

bull Investment Dont put all your eggs in one basket

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

JBA

The HAPPIEST

people DONOT

necessarily have the

BEST of all

They simply

APPRECIATE what

they find on their

wayrdquo

Let us choose the way to live

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Power of Equity

Unbelievablebut it has happened

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Just imaginehellip

bullHow much can you make in 26 years by just investing Rs10000 initially in any of financial instruments

Take a wild guess Let us look at the real examplehellip

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

If you have subscribed in 100 shares of ________ company with a face value of Rs 100 in 1980hellip

bullIn 1981 company declared 11 bonus = you have 200sharesbullIn 1985 company declared 11 bonus = you have 400sharesbullIn 1986 company split the share to Rs 10 = you have 4000sharesbullIn 1987 company declared 11 bonus = you have 8000sharesbullIn 1989 company declared 11 bonus = you have 16000sharesbullIn 1992 company declared 11 bonus = you have 32000sharesbullIn 1995 company declared 11 bonus = you have 64000sharesbullIn 1997 company declared 12 bonus = you have 192000sharesbullIn 1999 company split the share to Rs 2 = you have 960000sharesbullIn 2004 company declared 12 bonus = you have 2880000sharesbullIn 2005 company declared 11 bonus = you have 5760000shares

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

At the end of 2005hellip

bullYou have 5760000shares of the company

Any guess about the company (Hint Its an Indian company)

Any guess about the present valuation

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

The result of lsquoPower of Compoundingrsquo

Your present valuation is aboutRs 200 Cr+

ampThe company is lsquoWIPROrsquo

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25

Other such exampleshellip

CIPLAInvestment of Rs 10000 in 1979 will fetch Rs 95 cr+

INFOSYSInvestment of Rs 10000 in 1992 will fetch Rs 15 cr+

RANBAXYInvestment of Rs 1000 in 1980 will fetch Rs 19 cr+

• Slide 3
• Slide 25