Claims Final (2)

THIS IS A DETAILED PROJECT ON MANAGEMENT OF CLAIMS OF ALL DIFFERENT TYPES OF INSURANCE.

Claims Final (2)

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TECHNICAL ANALYSIS

TECHNICAL ANALYSIS

Technical analysis is a security analysis discipline for forecasting the future direction of prices through the study of past market data, primarily price and volume. Technical analysis and fundamental analysis are the two main schools of thought in the financial markets.

Technical analysis looks at the price movement of a security and uses this data to predict its future price movements.
Fundamental analysis, on the other hand, looks at economic factors, known as fundamentals. Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume.

Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity. It uses charts and computer programs to study the stock’s trading volume and price movements in the hope of identifying a trend. In fact the decision made on the basis of technical analysis is done only after inferring a trend and judging the future movement of the stock on the basis of the trend.

Technical Analysis assumes that the market is efficient and the price has already taken into consideration the other factors related to the company and the industry. It is because of this assumption that many think technical analysis is a tool, which is effective for short-term investing.


HISTORY OF TECHNICAL ANALYSIS

The principles of technical analysis derive from the observation of financial markets over hundreds of years. The oldest known hints of technical analysis appear in Joseph de la Vega's accounts of the Dutch markets in the 17th century. In Asia, the oldest example of technical analysis is thought to be a method developed by Homma Munehisa during early 18th century which evolved into the use of candlestick techniques, and is today a main charting tool.
Dow Theory is based on the collected writings of Dow Jones co-founder and Editor Charles Dow, and inspired the use and development of modern technical analysis from the end of the 19th century. Other pioneers of analysis techniques include Ralph Nelson Elliott and William Delbert Gann who developed their respective techniques in the early 20th century.
Many more technical tools and theories have been developed and enhanced in recent decades, with an increasing emphasis on computer-assisted techniques. Walter Deemer was one of the technical analysts of that time. He started at Merrill Lynch in New York as a member of Bob Farrell's department. Then when the legendary Gerry Tsai moved from Fidelity to found the Manhattan Fund in 1966, Deemer joined him. Tsai used to consult him before every major block trade, at the start of a time when large volume institutional trading became the norm and the meal ticket for brokers. Deemer, could recreate market history on his charts and cite statistics. He maintained contact with the group of other
pros around then, who shared their insights with each other in a collegial confidence worthy of the priesthood. Other pioneers of analysis techniques include Ralph Nelson Elliott and William Delbert Gann who developed their respective techniques in the early 20th century.

CHARACTERISTICS

Technical analysis employs models and trading rules based on price and volume transformations, such as the relative strength index, moving averages, regressions, inter-market and intra-market price correlations, cycles or, classically, through recognition of chart patterns.

Technical analysis stands in contrast to the fundamental analysis approach to security and stock analysis. Technical analysis "ignores" the actual nature of the company, market, currency or commodity and is based solely on "the charts," that is to say price and volume information, whereas fundamental analysis does look at the actual facts of the company, market, currency or commodity. For example, any large brokerage, trading group, or financial institution will typically have both a technical analysis and fundamental analysis team.

Technical analysis is widely used among traders and financial professionals, and is very often used by active day traders, market makers, and pit traders. In the 1960s and 1970s it was widely dismissed by academics. In a recent review, Irwin and Park reported that 56 of 95 modern studies found it produces positive results, but noted that many of the positive results were rendered dubious by issues such as data snooping so that the evidence in support of technical analysis was inconclusive; it is still considered by many academics to be pseudoscience. Academics such as Eugene Fama say the evidence for technical analysis is sparse and is inconsistent with the weak form of the efficient market hypothesis. Users hold that even if technical analysis cannot predict the future, it helps to identify trading opportunities.

In the foreign exchange markets, its use may be more widespread than fundamental analysis. While some isolated studies have indicated that technical trading rules might lead to consistent returns in the period prior to 1987, most academic work has focused on the nature of the anomalous position of the foreign exchange market. It is speculated that this anomaly is due to central bank intervention. Recent research suggests that combining various trading signals into a Combined Signal Approach may be able to increase profitability and reduce dependence on any single rule.

HOW TECHNICAL ANAYSIS IS DONE?
Technical Analysis is done by identifying the trend from past movements and then using it as a tool to predict future price movements of the stock. It can be done by using any of the following methods:

a) Moving Averages— This method is used to predict the trend and specify various support and resistance levels in the short and long term period. Most commonly used moving averages are 30 DMAs and 200 DMAs.Where DMA means Days Moving Average.

b) Charts & Patterns— Some analysts’ uses charts and patterns to decide on the trend and then judge the future movement. The tool used by such analyst is converting the chart in one of the many form of many shapes commonly formed by stocks. Some of such patterns are:

TYPES OF TRENDS

Trends can be classified broadly in 3 types.

a) Uptrend: - Generally a stock moves in any direction with phases of consolidation or moving against the trend for a short period. But still it creates a higher Highs and Lows in case of an uptrend. In short each short rally will create new High for the stock.

b) Downward: - In this case as against Uptrend the stock creates lower Highs and
lows. Furthermore in case of Downtrend the fall is much more steeper than the
rise in case of Uptrend.

c) Range-bound: - In case of such a trend the price moves in a small range for the
long period. There is no apparent direction as far as trend is concerned in this
case.

Role of Volume: Volume plays a key role in deciding about the kind of future movement in stock. Whenever there is a sudden rise in the volume of the stock and if it is not followed by a price fall, it is a sign of consolidation and that the price may rise in near future. Generally if any stock breaks any trend it is accompanied by huge rise in volume.
In case of range bound trend the volume tends to die down to a great extent. Smart investor uses technical analysis to judge the rise in volume and take early positions in the stock during breakthroughs.

Who uses Technical Analysis?

Investors for their short-term trading decisions use Technical Analysis. This short-term may be further divided in day trading, short-term investment and for hedging purposes.
The role played by Technical Analysis in each case is as follows:

1) Day Traders: A day trader is one who takes and squares off his position both on the same day. Mostly a day trader counts on turnover rather than margin. A day trader will interpret the market movement in the manner stated below.
.
2) Short term investors: These people form the biggest clientele base of both the brokers and the Technical Analyst. To explain the working let’s take the price movement curve of Infosys Technologies on NSE for the period 1st January 2003 to 9th April 2003. On closely analyzing the chart you will notice that a sustained buying is coming at the level of around Rs.4000. Another aspect, which should be noted, is the declining trend in terms of short term ‘High’ created by the stock. We can clearly deduce that each short-term rally is creating a lower high over the given term. In such a situation it is recommended by analyst to buy at the resistance level but sell it off immediately if it breaks the level by a margin of 2-3%. This is just an illustrative example and the level of analysis varies with each case.

3) Hedgers: These are generally big investors, who have lot of money at stake and hence they look to have some hedging of their risk. The strategy followed by this section of investors is that they compare the stock in consideration with the index and on the basis of the result of this comparison they take their position in the stock. This can be explained by comparing the movement of nifty on the graph with Infosys movement as we have done in the figure given below.
If we look at both the charts of nifty movement with Infosys movement we find that although both have fallen over the period but Infosys has witnessed some rallies and hence we can clearly say that a hedger will benefit by using technical Analysis and getting out at the periods when Infosys has given an upward rally.

Thus if we use only technical analysis in itself and do not consider other aspects it is very unlikely that we will have much success in the long run, particularly in case of short-term investments. But if we use Technical analysis along with fundamental analysis or discount the industry and company related news while considering the valuation, our chances of minimizing the risk brightens.
One thing that we must realize is that technical analysis provides us only with the trend and judge future on that basis, it can be far from actual in few cases, one of them was the day Infosys crashed by 30% on a single day. By no imagination and no analysis one could have guessed the same or rather have come closer to it. Therefore the best use of technical analysis is to realize the trend and levels at which it will break the trend so that one is prepared to take positions when such trend breaks. It is because of this disadvantage that Technical analysis more useful only for short-term investing.


VIJAY POPAT

TOTAL BUDGET REVIEW BY BENCHMARKERS

 

SECTOR WISE ANALYSIS OF BUDGET

AUTO COMPONENTS

PROPOSAL

Excise duty on auto components and tyres increased from 8% to 10%. Interest subvention of 2% on pre-shipment credit for small and medium exporters extended to 31 March 2011.

IMPACT

No significant impact on the industry. Increase in excise duty on tyres will be passed on fully to original equipment manufacturers (OEMs) and replacement segments. A rise in excise duty for the auto component sector may be passed on to automobile manufacturers. However, if absorbed, it will be offset by increase in demand. The interest subvention of 2% will have a marginally positive impact for small and medium exporters engaged in exports of auto components.

AUTO/ TWO- WHEELER

PROPOSALS

Excise duty up from 8% to 10%; excise duty on big cars, sport utility vehicles and multi-utility vehicles raised from 20% to 22%; additional duty component retained at Rs15,000 for cars of 1,500-1,999cc engine capacity and  Rs20,000 for passenger vehicles with engine capacity above 2,000cc; excise duty of Re1 per litre on fuel; customs duty 5% higher; allocation for road development up 13%; weighted deduction on in-house R&D spending raised from 150% to 200%; 4% excise duty on electric vehicles; critical parts and assemblies of such vehicles exempted from basic customs duty, special additional duty; countervailing duty of 4% imposed.

IMPACT

Higher excise duty rate is likely to be passed on to consumers and is partially negative. But this is likely to be compensated by exemptions on personal income-tax rates. The government’s thrust on rural and infrastructural development remains positive. The increased weighted deduction rate for in-house R&D will encourage higher R&D allocations.

BANKING/ NBFCs

PROPOSALS

RBI to consider giving banking licenses to private sector companies /non banking finance companies. Government to recapitalise select public sector banks by Rs16,500 crore; additional capital to regional rural banks. Increase in interest subvention from 1% to 2% for farmers who pay as per repayment schedule, extension of debt waiver and debt waiver for farmers extended to 30 June.

IMPACT

Competition is likely to further intensify. Recapitalising public sector banks is likely to help around one third of these banks. The additional interest rate subvention schemes to encourage prompt repayment by farmers should improve credit culture. But b, the government’s borrowing programme for FY11 remains sizeable and if the credit offtake is more than 15% - 16%, bond yields may rise and thereby impact treasury profits.

CAPITAL GOODS/ ENGINEERING

PROPOSAL

Increased allocation for power and infrastructure sector; excise duty cut from 8% to 4% on compact fluorescent lamps (CFL) and LED lamps; 5% concessional import duty on inputs for photovoltaic, solar panels; excise duty waived on photovoltaic, solar panels, and on inputs required in rotor blades.

IMPACT

Increased allocation and long-term funding availability for power and infrastructure projects will induce more investment and thereby benefit equipment manufacturers. Focus on energy efficiency and excise duty reduction for CFL will result in improved demand prospects for players in the lighting segment. Concessional import duty and waiver of excise duty on photovoltaic and solar panels as well as lower excise duty on inputs for rotor blades will benefit photovoltaic cell and wind turbine generator manufacturers, respectively.

CEMENT

PROPOSAL

2% excise duty hike.

IMPACT

Increase in outlay on roads, subventions on housing and focus on infrastructure development should boost demand for cement. Increased rural income under National Rural Employment Guarantee Scheme will also boost rural housing demand and, in turn, demand for cement. However, increase in excise duty and imposition of Rs50 per tonne cess on imported and domestic coal will increase costs, which will difficult to pass on to consumers given the current over supply situation.

CONSTRUCTION

PROPOSAL

Higher allocation for roads, railways, housing, urban infrastructure sectors; India Infrastructure Finance Co. Ltd (IIFCL) to continue take-out financing; minimum alternate tax (MAT) increased from 15% to 18% of book profits.

IMPACT

The increased outlay and continued take-out financing and refinancing plans of IIFCL, and availability of funds through long-term infrastructure bonds, will aid in faster execution of infrastructure projects. MAT increase will have negative impact on players with operational build-operate-transfer projects.

DRUGS/ PHARMACEUTICALS

PROPOSAL

Increase in weighted reduction from 150% to 200% on expenditure incurred on in-house research and development (R&D) activities, and from 125% to 175% on activities outsourced to specific institutions. Partial rollback in excise duty from 8% to 10% (to impact raw material costs).

IMPACT

The increase in weighted reduction on R&D activities is a positive and will continue to support higher investments by Researchled pharmaceutical companies. It’s a positive for contract research organisations as well. The increase in excise duty for raw material will impact the cost structure. Also, an increase in petrochemical prices may impact some of the basic raw material (intermediate) costs, impacting margin. The increase in MAT rate, however, is going to increase tax outgo for few companies that are currently paying lower taxes.

ELECRICITY/POWER

PROPOSALS

Increase in allocation to power sector at Rs5,130 crore (increase of 152%); increase in available long term funding through refinancing from India Infrastructure Finance Co. Ltd; increase in allocation to renewable energy sector at Rs1,000 crore (increase of 61%); formation of coal regulatory authority and national clean energy fund; clean energy cess of Rs50 per tonne on both domestic and imported coal; increase in minimum alternate tax (MAT) rates from 15% to 18%.

IMPACT

Increased allocation to power sector will be positive for central public sector undertakings. Increase in allocation and excise duty benefits are clear positives for firms in renewable energy segment. Coal regulatory authority will bring regulatory clarity and introduction of competitive bidding mechanism for allotment of coal blocks will further enable increased participation from private firms. The increase in MAT and cess on coal are a negative as they will negatively impact profitability of merchant power plants, where costs are not a pass through.

HOTELS/TOURISM

PROPOSALS

Benefits of 100% investment linked tax deduction on capital expenditure (excluding land, goodwill and financial instrument) for building and operating a new hotel (commissioned after 1 April) of two star category and above, extended from select locations to across the country.

IMPACT

Bringing the hotel industry within the preview of investment linked tax deductions could promote balanced (across categories) incremental investments in fresh inventory, reducing the supply–demand gap in the country. Benefits of increased government thrust on infrastructure/roads to trickle down to the tourism industry over the medium to long term. The increase in MAT rates will, however, have an adverse impact.

HOUSING

PROPOSAL

Rs1,270 crore allocated under Rajiv Awas Yojana; allocation for housing and urban poverty alleviation raised to Rs1,000 crore; 1% interest subvention on housing loan up to Rs10 lakh extended to 31 March 2011; allocation under Indira Awas Yojana increased.

IMPACT

Allocation under Rajiv Awas Yojana will aid slum redevelopment programmes. Moreover, extension of the scheme of 1% interest subvention on housing loan up to Rs10 lakh (where the cost of the house does not exceed Rs20 lakh) will continue to provide a boost to affordable housing. On the rural front, increase in allocation under the Indira Awas Yojana to Rs10,000 crore will help reduce the prevailing shortage in rural housing. However, these allocations will not significantly impact the organised housing sector.

INFORMATION TECHNOLOGY

PROPOSAL

Minimum alternate tax (MAT) rate has been increased from 15% to 18% while surcharge has been reduced from 10%  to 7.5% for Indian companies.

IMPACT

The impact of the Union Budget 2010-11 on the IT sector is negative. The increase in MAT rate will offset any  benefits resulting from the decrease in surcharge and will affect the players’ cash flows. The impact of MAT will be higher for tier II players compared to tier I players.

OIL AND GAS

PROPOSAL

Basic customs duty of 5% restored on crude petroleum, 7.50% on petrol and diesel and 10% on other refined  products. Central excise duty on petrol and diesel hiked by Rs1 per litre each.

IMPACT

The revised duty structure will marginally increase the import duty differential for refineries, leading to a marginally higher refining margin, which is a positive for standalone refineries, including greenfield projects currently being set up. Higher import duty and excise duty is negative for oil marketing companies as gross under-recoveries will increase. But the post budget hike in fuel prices will largely negate the impact. Increase of MAT is marginally negative

for some large oil and gas companies and new refinery projects. Five percent import duty on crude oil is positive for upstream companies, as they will be benefited in an import parity based pricing regime.

ROADS

PROPOSALS

Budget allocation for road projects increased by 13.5% to Rs19,894 crore in 201011, incremental disbursement of Rs25,000 crore over the next three years by India Infrastructure Finance Company Ltd ( IIFCL) under its takeout financing scheme and import duty exemption for specified machinery used in construction.

IMPACT

The increased outlay will favorably affect companies involved in road construction. The takeout financing through IIFCL would facilitate the availability of long term capital. The increase in MAT rate from 15% to 18% will have an adverse impact. Excise duty hikes in cement, petrol/diesel will also push up costs for the sector. Import duty  exemption for specific equipment will provide some respite.

TELECOM

PROPOSALS

MAT increased from 15% to 18%. Exemption from basic, countervailing duty (CVD), and special additional duty (SAD) to include battery chargers, headphones; Exemption of SAD extended to mobile phones not imported in prepackaged form.

IMPACT

The impact on the telecom services sector is negative. The increase in MAT will negatively impact the profitability of telecom services providers. The duty exemptions will result in further reduction in mobile handset prices. However, the impact will be marginal as mobile handsets and accessories are already very affordable.

TEXTILES

PROPOSALS

The exemption from basic, countervailing duty (CVD), and special additional duty (SAD) on components and accessories of mobile

handsets has been extended to include battery chargers and headphones. The government has also extended the exemption of SAD to mobile phones that have not been imported in prepackaged form. MAT increased from 15% to 18%.

IMPACT

The increase in MAT will negatively impact the profitability of telecom services providers. The duty exemptions will result in further reduction in mobile handset prices. However, the impact will be marginal as mobile handsets and accessories are already very affordable.

BY-

BENCHMARKERS

RACHANA JAIN

VIJAY POPAT

NITA CHANGANI

SONAM JAYASWAL

RAHUL AGARWAL

WASIM AHMED

VIJAY POPAT