REPLIES TO QUERIES

1. Delivery Percentage :

There is no calculation for delivery percentage. This can be obtained from BSE Site or NSE Site at the end of the day. In case of shares placed in T Group, all transactions should be delivery based. Therefore, the delivery percentage is obviously 100%. In other cases, this percentage may vary depending on the type of share, share capital, volumes traded etc. In shares which are in F&O segment, there are no circuit limits. Here the delivery percentage tends to be on a lower side with more fluctuations. This is a haven for day traders.

In companies like SBI or other big companies, a delivery percentage of above 30% on any day may indicate accumulation and there are days when the percentage remains less than 15%. Here Day trading is a factor. In small companies a delivery percentage of over 60% may show accumulation and a smaller percentage of 25% or so or even less, may show day trading.

The moot point I was trying to convey is that, when the M factor increases sharply and the delivery percentage remains on a lower side, this indicates increased operator activity (day trading) and it is advisable to book partial profits on any such steep rise. Of course, this comes in practice and keeping a keen watch on the markets.

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PE RATIO
PE ratio is the share price prevalent in the market divided by the eps. EPS is the net profit divided by number of equity shares. While EPS is a simple arithmatic calculation, PE ratio is a bit complicated as there are no hard and fast yardsticks. EPS is more of a fundamental based study, but PE may have to do more with technicals.
Now Cement Companies are not faring very well due to various factors so the markets are not paying much attention to the shares. A recent example in PE ratio anomaly is Ranbaxy. It is stated that it is being traded at over 40 PE and the increase in price is mostly news driven, due to acquisition of a stake by a Japanese Firm. Other Pharma firms may not be commanding the same PE.

Rather than PE ratios (which are mostly driven by market mechanics and technicals), it is worthwhile to look at the book value and price to book value ratio. If the ratio is much lesser than one (price is less than book value) and there is consistent profitability, it is safer to enter the scrip.

Comments will be welcome.

Kashiwala