Investing Trends

Mumbai: JM Financial Asset Management Pvt Ltd on Wednesday filed initial document with India's marketplace regulator to establish a close-end equity monetary fund that volition put in not more than than 11 stocks.

How expensive is the Indian equity
market? At a clip when Sensex is at a historical high, it is to be checked whether
the marketplace is properly valued and how makes it compare with other emerging
markets? It is very hard for any 1 to happen the exact value, but certainly
one can look at some indexes to acquire a broader idea. The most
common parametric quantity used is the P/E (price to earning ratio). So where makes India
stand on a planetary P/E ranking? Republic Of India is figure two in P/E ranking among
world’s major economies, adjacent lone to China. We have got used the leading
stock index of a state to stand for the P/E of that country. So when we say
P/E of India, we intend P/E of Sensex since it is the prima benchmark of Indian
stock market. The up-to-the-minute one calendar month norm P/E for Sensex is around
27 whereas China’s CSI index (the prima Chinese stock marketplace index) is
53.4. Even other prima Chinese indices are trading at pe multiple of 43-48. Though it gives a feeling that Sensex is over-valued, it is still not so
expensive; peg ratio (P/E to growth), another index of relative valuation,
for Republic Of India is 2.9. Here we have got taken the gross domestic product growing charge per unit of a state as a proxy
for sustainable long-term growth charge per unit of the prima index of that country. Brazil, which have P/E of 16 expressions cheaper than Republic Of India which have a P/E
of 26. But the peg ratio of both plant out to be 2.9. What it intends is the
higher P/E of Republic Of India as compared to Federative Republic Of Brazil is driven by the high growing rate. Even the peg ratio of Republic Of India is far behind that of US, Japan, United Kingdom with a peg ratio
of 6.1, 9.5 and 4.5 respectively. So the current evaluation of North American Indian Inc. is not
very high considering the high expected growing phase. Russia, another
emerging economic system in the human race have a P/E of lone around 13. Unlike other
parameters where a high ranking is a substance of pride, a high P/E mightiness be a
matter of concern. A high P/E intends an investor have to pay more than for an asset
with similar current earning levels. And why an investor will pay a higher
price? because he anticipates higher earning potentiality from the asset. But a P/E value of a state should always be compared with the peers. So with
similar state risks, investors may travel away from a high P/E state like
India to a low P/E state like Russia. Having said so, if the P/E is driven by
a long term sustainable growing charge per unit then it is just to pay a higher price.

MUMBAI: Equities opened higher Thursday trailing positive planetary cues. Cement shares led the rally. Indices also got support from banking and metallic element majors. At 10 americium the National Stock Exchange’s Bang-Up was at 4229.75, higher by 77 points or 1.84% from the former close. The Greater Bombay Stock Exchange’s Sensex shot up 258 points or 1.81% to 14506.36. Biggest Sensex weight gainers include Ambuja Cements (5.59%), ACC (4.92%), HDFC Depository Financial Institution (3.61%), State Depository Financial Institution of Republic Of India (2.75%), Satyam Computer (2.75%) and Reliance Energy (2.65%). There were no also-rans in the 30-share index. The marketplace comprehensiveness showed 887 progresses and 231 diminutions on BSE, while on NSE 624 progresses and 54 declines.

Japanese stocks advanced, set for the
largest gain since March. Companies that will report earnings
this week rose after the Nikkei newspaper said profit at Tokyo
Electron Ltd. will climb to a record.

Banks advanced with Mitsubishi UFJ Financial Group Inc.,
which fell to a 19-month low on April 27, climbing 3.2 percent as
investors judged recent losses excessive. The Topix Banks index
dropped 4 percent last month.

``Japanese stocks are catching up with rallies in other
markets as investor concern over earnings has eased,'' said
Takeshi Yamaguchi, who looks after $674 million at Sumitomo
Mitsui Asset Management Co. in Tokyo. ``All the bad news on bank
profits has already been discounted by previous declines.''

Exporters such as Canon Inc. and Honda Motor Co. also
advanced on speculation that slowing U.S. jobs growth and wage
increases will prompt the Federal Reserve to cut borrowing costs
in Japan's biggest overseas market.

The Nikkei 225 Stock Average rose 301.43, or 1.7 percent, to
17,696.35. The Topix climbed 30.69, or 1.8 percent, to 1734.91 as
of 2:27 p.m. in Tokyo. Both gauges are headed for the largest
gain since March 8.

The Topix fell for a second straight month in April, losing
0.7 percent while the Dow Jones Industrial Average and South
Korea's Kospi index climbed to records last week.

Tokyo Electron, the world's second-biggest supplier of
chipmaking equipment, advanced 150 yen, or 1.8 percent, to 8,480.
Toyota Motor Corp., Japan's largest automaker, added 60 yen, or
0.8 percent, to 7,290. Mitsubishi Estate Co., the nation's No. 2
property developer, climbed 170 yen, or 4.5 percent, to 3,920.

`Across-the-Board Gain'

All three companies are scheduled to report their earnings
this week.

Tokyo Electron's net income will probably rise 9 percent to
about 93 billion yen ($775 million) in the year ending March 2008,
the Nikkei reported, without saying where it got the information.
Sales will gain 5 percent to 880 billion yen, the report said.

``Japan's market had an across-the-board gain today but
money is flowing especially into companies with strong earnings
outlooks,'' said Yoshihiro Ito, who helps look after $689 million
in assets at Okasan Capital Management Co. in Tokyo.

Mitsubishi UFJ, Japan's biggest lender by assets, rose
40,000 yen, or 3.2 percent, to 1.3 million. Mitsubishi UFJ
dropped to the lowest since September 2005 on April 27 on concern
its profit growth will not improve soon. Mizuho Financial Group
Inc., the nation's second largest, added 19,000 yen, or 2.6
percent, to 749,000.

Japan's major banks are set to report their earnings this
month with Mitsubishi UFJ being scheduled on May 23 and Mizuho on
May 22.

Canon Jumps

Canon, the world's largest digital camera maker, surged 270
yen, or 4 percent, to 7,080, gaining the most since Oct. 5. Honda,
which made 55 percent of its sales in North America in the year
ended March 2006, advanced 80 yen, or 2 percent, to 4,120. Sony
Corp., the world's biggest video-game maker, climbed 140 yen, or
2.2 percent, to 6,550.

The Labor Department said on May 4 the 88,000 increase in
employment last month followed a 177,000 gain in March that was
smaller than previously estimated. The U.S. jobless rate rose to
4.5 percent from 4.4 percent, which matched a five-year low.

The report also showed that average hourly earnings grew at
a 3.7 percent pace in April from a year earlier compared with a 4
percent rate in March.

Mitsui Fudosan, Nippon Steel

``Inflation in the U.S. has cooled down and that's behind
the rally in the country's equity markets,'' said Ryoji Musha,
chief investment officer at the Japanese brokerage unit of
Deutsche Bank AG.

Property developers such as Mitsui Fudosan Co. and
steelmakers such as Nippon Steel Corp. jumped on expectations
that they will have strong earnings for this business year.

Mitsui Fudosan, Japan's biggest property developer, surged
240 yen, or 6.8 percent, to 3,750. Nippon Steel Corp., Asia's No.
1 maker of the alloy, advanced 36 yen, or 4.4 percent, to 848.
Sumitomo Corp., the third-biggest trading house in Japan, rose
110 yen, or 5.1 percent, to 2,260.

``Real estate companies were bought on a trend of rising
asset prices and office rents,'' said Okasan Capital's Ito.
``There's also strong expectation that steelmakers and trading
companies will have a profit expansion over the medium term,
helped by demand in emerging markets.''

Property shares also gained after the Nikkei reported on May
5 that Japan's public pension fund, the world's largest pool of
retirement funds, may start investing in privately placed real
estate funds and mortgage-backed securities to limit risk from
stock and bond markets.

TDK, Fujitsu

``Investment in the real estate industry is a global trend
so related stocks in Japan are likely to gain further,'' said
Sumitomo Mitsui's Yamaguchi.

TDK Corp., Japan's biggest maker of magnetic heads, advanced
190 yen, or 1.9 percent, to 10,240 after saying it will spend 50
billion yen ($416 million) to build an electronics component
factory.

The new factory, located in Yurihonjo, northern Japan, will
increase the company's manufacturing capacity of ceramic
capacitors by 40 percent, Nobuyuki Koike, a spokesman for the
Tokyo-based company, said today, confirming a Nikkei newspaper
report on May 6.

Fujitsu Ltd., Japan's biggest computer-services provider,
rose 14 yen, or 1.9 percent, to 755 after the company said it
plans to buy France's GFI Informatique SA for 419 million euros
($570 million) to add clients and trim its reliance on Japan.

Fujitsu said on May 2 it plans to offer 8.50 euros for each
GFI share and 3.15 euros for each warrant of the Paris-based
computer consultant. The companies have no ``formal agreement,''
it said.

Nikkei futures expiring in June climbed 1.6 percent to
17,720 in Osaka and rose 1.5 percent to 17,715 in Singapore.

To contact the reporter for this story:
Makiko Suzuki in Tokyo at