[reverse_gear]

Originally Posted by Tjax

Or is it that the investment by the sharks in every case is by way of issue of fresh shares by the company and diluting the shares of existing shareholders?

Almost always, YES. Only exception would be where they specifically mention that they are paying the founders (or other shareholders) to acquire their shares. This is very, very rare on Shark Tank.

[Tjax]

Originally Posted by reverse_gear

Almost always, YES. Only exception would be where they specifically mention that they are paying the founders (or other shareholders) to acquire their shares. This is very, very rare on Shark Tank.

Originally Posted by vrprabhu

Pretty simple actually - if the equity share capital undergoes a change (increase) and/or the promoter doesn't maintain his proportion, then it is the company which gets the money.

That clarifies a lot. Thanks.

[PGA]

I had purchased some shares of PSU NMDC as it was paying very good dividend. Recently I came across a news that NMDC was buying back it's shares at Rs 98. Record date was set for 18 Jan 19. Current price is hovering around Rs 90-92 for last one month. As per my theoratical knowledge the share price should have risen to the repurchase price as it offered an arbitrage opportunity, but it hasn't happened that way, request someone to throw some light on both practical and theoratical aspect of this. Regards

[SmartCat]

Originally Posted by PGA

I had purchased some shares of PSU NMDC as it was paying very good dividend. Recently I came across a news that NMDC was buying back it's shares at Rs 98. Record date was set for 18 Jan 19. Current price is hovering around Rs 90-92 for last one month. As per my theoratical knowledge the share price should have risen to the repurchase price as it offered an arbitrage opportunity, but it hasn't happened that way, request someone to throw some light on both practical and theoratical aspect of this. Regards

The buyback size is Rs. 1,000 crores @ Rs. 98 per share. This means only around 10 crores shares (out of 315 crores shares issued) will be bought back.

Meaning, if every shareholder including promoter participates in the buyback, only 3.2% (10 divided by 315) of shares you submit for buyback will be accepted. That's why current market price might not touch the buyback price. Even if it does, it might be for other reasons (Eg: sudden spike in iron ore prices)

[PGA]

Thanks a lot Smartcat, that was as lucid as it can be. The devil is in little detail which I normally miss in stocks and end up flat-footed.
Another aspect that amazes me is how easily gullible public which includes experts and professionals too can be led up the garden path by all including Govts. They sold shares of NMDC in OFS exactly a year ago for around Rs 150 and now are going for buy back at Rs 98. What an easy way to make money.

[rovingeye]

So, market gurus, post budget, will the extra money in the hands of middle class find its way into the stock market? Is this the start of a bull run?

[Tjax]

Anyone have any thoughts/suggestions on the upcoming Embassy REIT? Considering it is the first such offering in India, it is very difficult to take a call on whether it makes financial sense to invest in it? It is however very tempting since it gives amateur investors like me an opportunity to invest in the commercial real estate sector of the country without having to spend tens of lakhs or crores of rupees.

[rovingeye]

@SmartCat - Are we seeing a dead cat bounce or is this something more decisive?

[SmartCat]

Originally Posted by rovingeye

@SmartCat - Are we seeing a dead cat bounce or is this something more decisive?

There are some technical indicators to suggest that this is not a "dead cat bounce".

- India Vix (volatility index) is falling and is now below 15. Long term average is around 14. What this means is that traders do not expect major uncertainty in the near future
- Advance decline ratio is excellent. Large/mid/small cap indices are all climbing up. Stocks from most sectors are going up, but thankfully "poor quality" stocks are not.
- Banknifty is close to all time highs. Nifty finally broke out of 4 month range.
- FII are pouring in money. INR is strengthening against all major currencies.

But then, if somebody is nervous about the markets and already has significant assets in the stock market, maybe it is better to wait till election results are out.

[rovingeye]

Originally Posted by SmartCat

There are some technical indicators to suggest that this is not a "dead cat bounce".

- India Vix (volatility index) is falling and is now below 15. Long term average is around 14. What this means is that traders do not expect major uncertainty in the near future
- Advance decline ratio is excellent. Large/mid/small cap indices are all climbing up. Stocks from most sectors are going up, but thankfully "poor quality" stocks are not.
- Banknifty is close to all time highs. Nifty finally broke out of 4 month range.
- FII are pouring in money. INR is strengthening against all major currencies.

But then, if somebody is nervous about the markets and already has significant assets in the stock market, maybe it is better to wait till election results are out.

Thank you SmartCat for the affirmation. Always value your smart opinion.

[sups]

Does anybody take service from "Value Research Stock Advisor" paid service? Is the advise good for people who does not have time/expertise to select stocks? Any other better recommendations for such service? I am not looking for PMS as it needs a big fund to start with.

[SmartCat]

Originally Posted by sups

Does anybody take service from "Value Research Stock Advisor" paid service? Is the advise good for people who does not have time/expertise to select stocks? Any other better recommendations for such service? I am not looking for PMS as it needs a big fund to start with.

Just invest in an equity mutual fund then. You can look up star ratings on valueresearchonline for equity mutual funds and go for ones with -

- Long history (say 10+ years)
- Large Assets Under Management (say 10,000+ crores)
- Largecap or Large + Midcap or Multicap allocation
- Good reputation (Birla Sunlife or HDFC or ICICI, not Indiabulls or LIC)
- 4 or 5 star rated

Stock advisor services will not give you anything extra (returns or low volatility) over a good equity mutual fund.

[sups]

Originally Posted by SmartCat

Stock advisor services will not give you anything extra (returns or low volatility) over a good equity mutual fund.

Thanks a lot for the solid advise. I have been investing regularly in SIP mode in the following equity funds:

ICICI Pru Value Discovery Fund Direct(G)
Mirae Asset Emerging BlueChip Direct (G)
Franklin India Prima Plus Fund/Equity Direct (G)
L&T Midcap Fund Direct (G)

I do put some extra in those funds when the market goes down. But I was exploring if I can increase my return by direct investment into stocks through some advisory service. This is why your comments are so useful.

In between I invested in some companies like PI Industries directly and it did give me some good returns. So it makes me greedy :-).

[rovingeye]

Originally Posted by SmartCat

- India Vix (volatility index) is falling and is now below 15. Long term average is around 14. What this means is that traders do not expect major uncertainty in the near future

The Vix is suddenly showing some tendency to go up. Why are people buying protection suddenly? Pull back in the horizon?

[SmartCat]

Originally Posted by rovingeye

The Vix is suddenly showing some tendency to go up. Why are people buying protection suddenly? Pull back in the horizon?

You should not be watching VIX so closely since you are an investor. It goes up and down a lot. Only Nifty options traders need to keep a close eye on VIX.