Showing posts with label PE ratio. Show all posts
Showing posts with label PE ratio. Show all posts

Monday, January 4, 2010

Will BRIC Nations perform well in 2010?

Russia topped the table of Countries whose stock Indices performed well in 2009. It is followed by Brazil and it is followed by India and China respectively. Russian Stock Index, Russian Trading System(RTS) appreciated by 112 percent in 2009. Brazil’s Stock Index Bovespa, appreciated by 83 percent. The Indian Stock Index Bse Sensex appreciated by 81 percent followed by China’s Shanghai Index (SSEC) by 80 percent.

What we have to take note is, China’ Index has been trading well below its all time high of 6124 and it is currently trading around 3300 level. India’s Sensex is trading around 17500, well below it all time high of 21000. Brazil Bovespa is trading around 68000, well below its all time high of 74000. Likewise, Russia’s RTS is trading around 1400, well below its high below 2400.
It is clearly visible that all these Indices are trading well below their 2008 highs indicating, that they haven’t actually grown. What they have done is, they have pared some losses. Our expectation is, will these countries stock Indices perform well in 2010 also. If so, will they cross their all time highs.

Fundamentally speaking, the companies in these countries have performed better in 2009 than 2008. But they have not performed as much as they performed for the last three years which indicates, the growth in these Stock Indices are unlikely in 2010. And also, the PE ratios of these indices are in higher side when compared to 2008.

Technically speaking, no bear market would bottom out in one year. It will take more than two years to bottom out. So, 2010 would be year of downtrends in all markets. So, 2010 would be as good as 2009 for the BRIC nations. If markets come in this year, then these nations could perform negatively this year.

Don’t be complacent in holding Investments in these countries.

Sunday, December 13, 2009

Fundamental Analysis of a Stock

Fundamental Analysis is the way of analysis of security based on their internal and actual performance of Company unlike Technical Analysis in which just the movement of prices is studied, without considering the fundamentals of the company

Fundamental analysis of a security is the study of Balance sheets, Profit or Loss account, assets and liabilities, sales income, other income, interest payment and etc.

Based on this an Analyst comes a conclusion about the future of the stock or the Company.

Some of the main value they see are PE ratio, EPS and Book value.

PE ratio is the ratio between Price of the Stock at the Market to the earning of the stock per share. Higher it is, the stock price is highly valued. If it is less, then the stock price is priced low.

EPS denotes Earnings per Share. It is the ratio of profits made for the year to the number of shares of the company. If the value is high, it means the earnings are high for the company and if it is low, then the earnings of the company is low.

Growing sales figure or slowing sales figure would influence the future performance of a company.

An analyst also see the performance of the sector at which a particular belongs to. They analyze the performance of the company with the sector’s performance. And also they see the future for the that sector.

Various factors like this influence the movement of the price of a particular stock. Study of this factors is Fundamental Analysis.