About Participatory Notes

What are P-Notes?
Participatory notes (P-Notes) are financial instruments used by hedge funds not registered with SEBI.* Hedge funds invest in Indian stocks through custodians in India* P-Notes are issued by registered FIIs to overseas investors who want to invest in India without registering
How do P-Notes work?
* India-based brokerages buy India-based securities and then issue P-Notes to foreign investors* Any dividends or capital gains collected from the underlying securities go back to the investors

Short Selling

SEBI is considering to impose restrictions on FIIs on indulging in "short selling". But what really is short selling? Here is an answer to your question....

When an investor goes long on an investment, it means the stock has been bought believing its price will rise in the future. Conversely, when an investor goes short, he is anticipating a decline in share price.
Short selling is the selling of a stock that the seller doesn't own. More specifically, short sale is the sale of a security that isn't owned by the seller, but that is promised to be delivered.
When you short sell a stock, your broker will lend it to you. The stock will come from the brokerage's own inventory, from another one of the firm's customers, or from another brokerage firm.
The shares are sold and the proceeds are credited to your account. Sooner or later, you must ’close’ the short by buying back the same number of shares and returning them to your broker. If the price drops, you can buy back the stock at the lower price and make a profit on the difference. If the price of the stock rises, you have to buy it back at the higher price, and you lose money.Since you don't own the stock, you must pay the lender of the stock any dividends or rights declared during the course of the loan. If the stock splits during the course of your short, you'll owe twice the number of shares at half the price.
Also, because you are being loaned the stock, you are buying on margin. In fact, you have to open a margin account to short stocks. There are two main motivations to short a stock. The most obvious reason to short is to profit from an overpriced stock or market. Sophisticated money managers short as an active investing strategy to hedge positions. This means they are protecting other long positions with offsetting short positions.

All About Inflation

How do you measure inflation?
Inflation is one of the biggest stories of recent weeks, and has received a great deal of attention from the media and politicians. At the same time, inflation is an economic problem that the average person meets on a daily basis in terms of higher prices, particularly of food products.

How is inflation measured?
In India, there are two broad measures of inflation - based on the consumer price index (CPI) and based on the wholesale price index (WPI). Of the two, the latter has a higher profile because it is measured every week. When you read about inflation rising to 7%, it is probably referring to inflation based on WPI.
WPI is based on the wholesale prices of 435 items ranging from agricultural commodities like wheat, rice, groundnuts etc to manufactured products like steel, cement etc. A single index number is calculated based on those prices, and the inflation rate is calculated by comparing the most recent index number with that of a year ago.

What is the government going to do about inflation?
The government has taken some quick steps like trying to curb exports in sensitive commodities and reduce the cost of imports. The is done because exports reduce domestic supply adding to the pressure on prices . Therefore, the government has already banned the export of cement and non-basmati rice and may ban other commodity exports later.
RBI has also taken action by raising rates, which will reduce liquidity and the total demand in the economy that will reduce the pressure on prices.