Those who have made new commitments on Valentines Day will be cursing their luck today. Yesterday people were chasing stocks as if there is no tomorrow and sensex jumped by 800 odd points. As I wrote in my yesterday’s blog, this is nothing but gambling. US markets tanked yesterday and Indian markets will follow the big brother today.
Our markets will be volatile today and it is better to say ‘Goodbye’ to the new commitments made yesterday.
For seasoned traders Educomp provides new shorting opportunity for today. In the current market conditions, any trades should be squared up on the same day for a good overnight sleep.
It is interesting to watch Biocon’s chart and it is forming a good base at 400 levels. Fundamentally company looks good and it is planning to list one of its subsidiaries this year, thus unlocking the value. This will be a good investment pick. Investor’s can wait for an opportunity to buy at 300-350 levels on a bad day.
As far as IT stocks are concerned the future is still uncertain. TCS and Infosys are accepting the fact that there is slowdown in US. The IPO from L&T Infotech is postponed. Negative signals everywhere suggests that there is still more pain left in IT sector. The only hope for IT sector is the budget. I expect the Government to extend the tax holiday for IT companies. This will be a major trigger for all Indian export oriented IT companies. Contrarian investors can seriously start watching companies like TCS, Infosys, Satyam, Wipro, Tech Mahindra, KPIT Cummins, Sasken communications and some mid cap IT companies and can start building a good IT portfolio from 2 years perspective. DSP Merill Lynch technology.com is a good fund to invest at the current price of Rs 28(Growth option).
Thursday, February 14, 2008
Wednesday, February 13, 2008
Indian markets are still below 13 day EMA
US markets rallies yesterday. Yesterday’s rally was strong and Indian markets are expected to open gap up.
Our markets are still below 13 day EMA and hence not good from a trading perspective. While there is no doubt that Indian markets will move up sharply today, taking a trading call is just gambling. We can’t predict US markets and a crash today will bring down our markets tomorrow. I have not seen any gambler's making money and so would not advice anybody to go long either in NIFTY or any other stocks. From my own experience I can say that disciplined investing and trading will succeed most of the time and gambling invariably fails almost every time. A quick buck through gambling gives a momentary kick but unfortunately it is short lived.
There will be huge rush to place the order at market opening and some of the stocks may rally today by 5 to 8%. It is not advisable to enter these stocks at high price. If the market is flat or down in the opening, (I don’t’t think that that would be the case) , then one can go long on NIFTY futures. Educomp is the stock to watch. One can see Educcomp at a critical point, just trying to cross 13 day EMA. The 13 day EMA slope is still not given the buy signal while it is givining some stability indications. If it is available at 3700 levels that would be a good buy from trading perspective. It has good support at 3500. If it drops to 3600 levels in today's market message is clear. It is heading below 13 day EMA and one should exit.
Note: It is extremely dangerous to trade in Educomp in derivatives as the price swing is huge. Taking positions beyond one's limits is not advised. Please do not venture unless you are a seasoned trader.
Our markets are still below 13 day EMA and hence not good from a trading perspective. While there is no doubt that Indian markets will move up sharply today, taking a trading call is just gambling. We can’t predict US markets and a crash today will bring down our markets tomorrow. I have not seen any gambler's making money and so would not advice anybody to go long either in NIFTY or any other stocks. From my own experience I can say that disciplined investing and trading will succeed most of the time and gambling invariably fails almost every time. A quick buck through gambling gives a momentary kick but unfortunately it is short lived.
There will be huge rush to place the order at market opening and some of the stocks may rally today by 5 to 8%. It is not advisable to enter these stocks at high price. If the market is flat or down in the opening, (I don’t’t think that that would be the case) , then one can go long on NIFTY futures. Educomp is the stock to watch. One can see Educcomp at a critical point, just trying to cross 13 day EMA. The 13 day EMA slope is still not given the buy signal while it is givining some stability indications. If it is available at 3700 levels that would be a good buy from trading perspective. It has good support at 3500. If it drops to 3600 levels in today's market message is clear. It is heading below 13 day EMA and one should exit.
Note: It is extremely dangerous to trade in Educomp in derivatives as the price swing is huge. Taking positions beyond one's limits is not advised. Please do not venture unless you are a seasoned trader.
Tuesday, February 12, 2008
US rally is not convincing, Slowdown In India growth confirmed
Yesterday US markets rallied. But I am not too positive with the rally. Dow Jones was up over 200 points at one point of time and later corrected about 100 points to end the session 133 points up. Opening high and ending low is a typical bear market signal.
This rally is not enough to power Indian markets and I expect Indian markets to be volatile even today. Wait and watch is the best strategy for the time being.
Suddenly SEBI and finance ministry woke up and realizing that IPO's are not prized properly. Greedy capitalists are sucking investor's blood in the name of "value creation". The value creation bubble is burst, thanks to Reliance Power IPO. Independent valuing agency only should fix the price of the IPO and this rule should be framed as early as possible.
Educomp may be good from derivatives trading perspective and booking profit as soon as one is in profit should be the mantra for the day. Reliance communication is beater up badly because of Reliance Power issue. Reliance Infratel's valuation is under threat because of recent crash of stock market and Reliance group company stocks.
Investor's should not be misguided by statements from 'Indian attire, Harward mindset' people who utter rather slowly everyday that India growth story is intact. As all of us know Industrial production nosedived from 13% to 7% in the latest quarter. Still if one listens to the preaching even god wouldn't save them!
This rally is not enough to power Indian markets and I expect Indian markets to be volatile even today. Wait and watch is the best strategy for the time being.
Suddenly SEBI and finance ministry woke up and realizing that IPO's are not prized properly. Greedy capitalists are sucking investor's blood in the name of "value creation". The value creation bubble is burst, thanks to Reliance Power IPO. Independent valuing agency only should fix the price of the IPO and this rule should be framed as early as possible.
Educomp may be good from derivatives trading perspective and booking profit as soon as one is in profit should be the mantra for the day. Reliance communication is beater up badly because of Reliance Power issue. Reliance Infratel's valuation is under threat because of recent crash of stock market and Reliance group company stocks.
Investor's should not be misguided by statements from 'Indian attire, Harward mindset' people who utter rather slowly everyday that India growth story is intact. As all of us know Industrial production nosedived from 13% to 7% in the latest quarter. Still if one listens to the preaching even god wouldn't save them!
Monday, February 11, 2008
No light on Dalal Street because of Power Failure
No one had expected such a bad listing for Reliance Power IPO and the impact on fragile Indian equity market is huge. We saw another black Monday, shaking investor confidence.
US markets ended marginally up. There is no much hope from US markets in the near future and so Indian markets are expected to be in bear phase for a longer term. Yesterday’s NIFTY closed below 200 day moving average which is not at all a good sign. There may be a slight recovery today but I would not bet on our markets for the time being.
It is better to watch the developments for few more days before bottom fishing. It is interesting to watch when the power will be back.
US markets ended marginally up. There is no much hope from US markets in the near future and so Indian markets are expected to be in bear phase for a longer term. Yesterday’s NIFTY closed below 200 day moving average which is not at all a good sign. There may be a slight recovery today but I would not bet on our markets for the time being.
It is better to watch the developments for few more days before bottom fishing. It is interesting to watch when the power will be back.
Saturday, February 9, 2008
Bears pulling the cart, Bulls watching US markets in the sidelines
Technically, market is very weak and is in a dangerous zone. Market is trading below 13 day exponential moving average, and the recent attempt to move above this decisive zone is failed and market is falling from last 3 days. In technical terms the bearish divergence pattern is clearly visible and apart from Reliance power listing and budget expectation, there are no other triggers to pull the market up. Global signals are negative as US markets ended in negative territory on Friday. Indian Inflation data is discouraging as inflation is up at 5 month high of 4.11%. This means there may not be an interest rate cut in India in the near future. This is the reason for a sudden fall in banking stocks on Friday.
As the general election is just one year away (under normal conditions), the primary objective of the Government is to keep the inflation under control. Bank stocks were flying high on the expectation of interest rate cut and the news may result in further correction in banking stocks. Stock market works on expectation and speculation and when there is negative news, the impact is swift and unforgiving. That is how markets work and we should respect this fact.
The cause for concern is that there are not many supports for the market in its downward journey. If the market breaks its short term support of 17000, next support exists only at 15500 levels. And if it breaks 15500 levels, next support is only at 14,000. So, if we have two bad days, market can slide to 14000 levels. Recovery of global markets is very important and if it doesn’t happen we can see 14000 levels very soon.
From a general market perspective we have seen withdrawal of two IPO’s (Emaar and Wockhardt) and postponement of union bank’s follow on offer. In one sense this is a black mark on Indian markets. But it is a good lesson to greedy promoters of the company to offer the shares to public at realistic valuations.
With the general market conditions, I am not too optimistic about Reliance power listing. By any miracle if I get a chance to sell at around 900, I would sell it as I am sure I can buy this at much lower price for sure. I am sure there will be many recommendations to buy this stock at high price, but one should be very careful to enter this stock at a high price.
I have read an article about grey market pricing and it seems the grey market premium has come down to 150 levels from previous 450 Rs. Th expectation is that Reliance power will list at around 600. If Reliance power fails to list at around 700, grey market operators are going to lose money and so they may sell other stocks in secondary market to meet their financial obligations, thus pulling the entire market down. So Monday is a dangerous day and I would look at almighty to save the market! Hope (only hope!)it would not be another black Monday!
Trading in banking stocks is also very dangerous for now. From an investment perspective, I am still bullish about banking stocks. For me only Sun Pharma looks attractive from derivatives trading and investment perspective. If market crashes, Sun Pharma can be bought at around 900 with a stop loss at 850.
Thursday, February 7, 2008
Laxmi is waiting...
Suryalakshmi cotton mills is investor’s darling in textile sector. This company was started in 1962 and one of the great wealth creators for the investors. This company manufactures over 300 varieties of denim also manufactures yarn for hosiery or weaving.
Textile sector is one of the worst hit sectors in India. Dollar appreciation and decrease in demand for denim has impacted the margins in the last 2 years. The price from an all time high of about 600 has come down to Rs 30 levels (after 1:1 bonus).
Textile industry is cyclical in nature and a turnaround is expected in a year’s time. This year’s budget will offer some sops to this sector and hence we have a short term trigger for the sector as a whole. Once the sector turns around, there is no looking back to Suryalakshmi as it is a leader in the sector and one of the most investor friendly textile companies. Recently Suryalakshmi has also entered into garments business.
Suryalakshmi is back in black in the third quarter of 2008, by reporting a 177% net profit increase compared to the third quarter 2006. One should also note that , the company had reported a net loss of about 2.72 crores for the September 2007 quarter. The net profit in the last quarter was 1.33 crores . There is 34% increase in sales compared to the previous quarter.
This is, in my opinion, is one of the best contrarian buys and definitely a future multibagger (20 bagger?). Once sector turns up, chasing this stock is very difficult.
This is only for long term investors and those who are expecting continuous upper limits within no time can forget this scrip and try their luck elsewhere. This company will definitely bring ‘Laxmi’ to patient investor’s house and lighten of their portfolio.
Unfortunately there was a fire in on of the denim factories on Jan 28, 2008. Though as per company statement, entire facility is insured, there will be a production disruption and it may impact the margins the the current quarter. Watch the company closely and this will be an excellent buy at around Rs 30.
Textile sector is one of the worst hit sectors in India. Dollar appreciation and decrease in demand for denim has impacted the margins in the last 2 years. The price from an all time high of about 600 has come down to Rs 30 levels (after 1:1 bonus).
Textile industry is cyclical in nature and a turnaround is expected in a year’s time. This year’s budget will offer some sops to this sector and hence we have a short term trigger for the sector as a whole. Once the sector turns around, there is no looking back to Suryalakshmi as it is a leader in the sector and one of the most investor friendly textile companies. Recently Suryalakshmi has also entered into garments business.
Suryalakshmi is back in black in the third quarter of 2008, by reporting a 177% net profit increase compared to the third quarter 2006. One should also note that , the company had reported a net loss of about 2.72 crores for the September 2007 quarter. The net profit in the last quarter was 1.33 crores . There is 34% increase in sales compared to the previous quarter.
This is, in my opinion, is one of the best contrarian buys and definitely a future multibagger (20 bagger?). Once sector turns up, chasing this stock is very difficult.
This is only for long term investors and those who are expecting continuous upper limits within no time can forget this scrip and try their luck elsewhere. This company will definitely bring ‘Laxmi’ to patient investor’s house and lighten of their portfolio.
Unfortunately there was a fire in on of the denim factories on Jan 28, 2008. Though as per company statement, entire facility is insured, there will be a production disruption and it may impact the margins the the current quarter. Watch the company closely and this will be an excellent buy at around Rs 30.
We are in bear market, Road ahead is slippery
I am suspecting a scam in the Indian markets. The way market has crashed yesterday is raising many questions. First, global cues were not bad yesterday and US markets ended marginally down on Wednesday. Asian markets were closed and Japan’s Nikkei was up. Indian market was flat till late in the day but suddenly started falling. European markets also opened only marginally lower and so cannot be a trigger to such a huge fall all of a sudden.
Historically India had no market regulator and thanks to Harshad Mehta’s scam in 1992, SEBI came into existence. Again in 2000 we had Ketan Parekh scam (in spite of SEBI’s existence) and the situation was similar. US markets were crashing because of dot com bust and that was linked to Indian markets fall while large scale price ramp up by some Indian operators were going on at that time.
I suspect some scam in our market. There is a rival group working against the interests of Anil Ambani’s ADAg. Is this group trying to pull down the market to have a bad listing for Reliance power IPO? Time will only tell the truth.
We all understand market correction, bear market, market cycle etc. Correction is good for the market and market cannot keep on going up or down always. But the way market is crashing is suspicious and unfortunately we cannot expect anything either from the SEBI or Government.
In such a sluggish market we can observe many penny stocks which we have not heard of hitting upper circuits. Also markets closing lower consistently at the fag end of the session tell us that we are in a bear market. There may be some upward movement in the market till the budget but I expect a bear market for next few months.
Investors and traders should be extra vigilant now. In a very volatile session it is difficult to stick to the normal 10% stop loss. Investors can keep a stop loss of 20%. If this price limit is reached, it is wise to exit the stock and preserve the capital.
US markets, though ended marginally up yesterday, the session was volatile. What is the forecast for the Indian market today? Unfortunately I don’t have a crystal ball to tell this. Watching is the best strategy.
Indian overseas bank can be bought at around 170 with a stop loss at 165 for a target of 180.
Historically India had no market regulator and thanks to Harshad Mehta’s scam in 1992, SEBI came into existence. Again in 2000 we had Ketan Parekh scam (in spite of SEBI’s existence) and the situation was similar. US markets were crashing because of dot com bust and that was linked to Indian markets fall while large scale price ramp up by some Indian operators were going on at that time.
I suspect some scam in our market. There is a rival group working against the interests of Anil Ambani’s ADAg. Is this group trying to pull down the market to have a bad listing for Reliance power IPO? Time will only tell the truth.
We all understand market correction, bear market, market cycle etc. Correction is good for the market and market cannot keep on going up or down always. But the way market is crashing is suspicious and unfortunately we cannot expect anything either from the SEBI or Government.
In such a sluggish market we can observe many penny stocks which we have not heard of hitting upper circuits. Also markets closing lower consistently at the fag end of the session tell us that we are in a bear market. There may be some upward movement in the market till the budget but I expect a bear market for next few months.
Investors and traders should be extra vigilant now. In a very volatile session it is difficult to stick to the normal 10% stop loss. Investors can keep a stop loss of 20%. If this price limit is reached, it is wise to exit the stock and preserve the capital.
US markets, though ended marginally up yesterday, the session was volatile. What is the forecast for the Indian market today? Unfortunately I don’t have a crystal ball to tell this. Watching is the best strategy.
Indian overseas bank can be bought at around 170 with a stop loss at 165 for a target of 180.
Wednesday, February 6, 2008
Ray of Hope is Reliance Power Listing
US markets ended lower yesterday and the day was volatile. Asian markets are volatile with negative bias. I expect Indian markets to be volatile with about 200 points swing in either direction. Reliance Power listing on Monday is positive news for Indian markets. There may be efforts to push the sensex by operators to have a good listing for Reliance power.
I would not be taking any long term calls in this market as market is dancing to the tune of global markets right now. Watching is the best strategy than trading.
I would not be taking any long term calls in this market as market is dancing to the tune of global markets right now. Watching is the best strategy than trading.
Tuesday, February 5, 2008
Lightening in Jan, Thunder in Feb, Run for cover before it rains!
A trader has to run, in fact run very fast, far away from the stock market to save his own life. US markets tanked yesterday and Asian markets are bleeding today morning. Blood bath will start sharp at 9.55 AM, both at BSE and NSE.
After lightening, it will thunder. After that it rains. Conventional wisdom is enough for understanding this. One doesn’t need an MBA from IIM or Harward for analyzing this. During lightening and thundering who will analyze the wind speed, direction, humidity and temperature. We look for a cover as we expect it to rain. Similarly when there is global market crash, we need not analyze the moving averages, ROC’s, RSIs’, ADX’s, Fibonacci numbers, Elliott waves, stochastic indicators, India growth story, India decoupling theory and domestic consumption lead economy. Saving capital is the only goal of every investor and trader.
India decoupling theory is behind us as a joke. Correction over hypothesis is cooked up by technical analysts and time has come for the technical analysts to stand infront of the mirror and analyse themselves before giving any technical calls. When global market corrects by 3%, Indian markets correct by 3 times! This is a simple theory and any nursery kid will understand this . I wrote about the confliting recommendations from experts in my yesterday's blog.
No hope for traders. Taking calls in either direction will be fatal in the current situation. It will be very difficult to exit long positions today without losses. Those who have taken short position yesterday will smile today. And the smile will be broad.
Investors who are wise and watching this game from the sidelines need to be more watchful. Bottom fishing may be fatal again. Investors with an appetite for risk can enter strong stocks like Blue star, Indian Bank, Karnataka Bank, Sun pharma at declines. Reliance communication may be a good buy if available below 600.
After lightening, it will thunder. After that it rains. Conventional wisdom is enough for understanding this. One doesn’t need an MBA from IIM or Harward for analyzing this. During lightening and thundering who will analyze the wind speed, direction, humidity and temperature. We look for a cover as we expect it to rain. Similarly when there is global market crash, we need not analyze the moving averages, ROC’s, RSIs’, ADX’s, Fibonacci numbers, Elliott waves, stochastic indicators, India growth story, India decoupling theory and domestic consumption lead economy. Saving capital is the only goal of every investor and trader.
India decoupling theory is behind us as a joke. Correction over hypothesis is cooked up by technical analysts and time has come for the technical analysts to stand infront of the mirror and analyse themselves before giving any technical calls. When global market corrects by 3%, Indian markets correct by 3 times! This is a simple theory and any nursery kid will understand this . I wrote about the confliting recommendations from experts in my yesterday's blog.
No hope for traders. Taking calls in either direction will be fatal in the current situation. It will be very difficult to exit long positions today without losses. Those who have taken short position yesterday will smile today. And the smile will be broad.
Investors who are wise and watching this game from the sidelines need to be more watchful. Bottom fishing may be fatal again. Investors with an appetite for risk can enter strong stocks like Blue star, Indian Bank, Karnataka Bank, Sun pharma at declines. Reliance communication may be a good buy if available below 600.
Monday, February 4, 2008
Conflicting Technical calls and theories from Experts
Yesterday, all of a sudden some of the technical experts started saying that market correction is over while Friday they were telling that market will test the recent lows. What made them to give such calls in a hurry? Is it that market zoomed over 500 points all of a sudden? Is it the continuation of the rally for the second day made them to rush to the TV channels or suddenly everything has changed across the globe through some black magic?
Well, I don’t have any answer. One of the leading technical analyst said that text book technical analysis doesn't work for Indian markets. I guess he would update his 'text book' soon to add this new Indian stock market theory. He was bearish and recommended to go short at Nifty 5400 and on Monday morning giving recommendations to go long that too in the morning!!! Market came down in the afternoon by over 300 points again proving that his new Indian stock market theory is not working. Well, if technical analysis works that way in India I don’t want to follow that any more.
The Indian decoupling theory is failing miserably and intelligent investors are aware of this. One end we are talking about globalization and other end we are trying to prove the India decouple theory. This is the greatest Indian market paradox.
US markets were weak on Monday and Indian markets are expected to remain weak today. I am not sure about the market direction and hence would not bet on bull market or bear market. As far as I am concerned, I have identified good stocks from investment and trading perspective and I am not too worried about the theories at this moment. Any theory will work for me as long as I have some cash flow into my account at the end of the day!
If I would trade, I would go long on Indian bank, Karnataka bank, Sun pharma and Reliance communications but not at the current price. I would wait the price to come down a bit and then only will take the call. As usual I would be trading with a strict stop loss as I would like to retain my capital for tomorrow as well.
Well, I don’t have any answer. One of the leading technical analyst said that text book technical analysis doesn't work for Indian markets. I guess he would update his 'text book' soon to add this new Indian stock market theory. He was bearish and recommended to go short at Nifty 5400 and on Monday morning giving recommendations to go long that too in the morning!!! Market came down in the afternoon by over 300 points again proving that his new Indian stock market theory is not working. Well, if technical analysis works that way in India I don’t want to follow that any more.
The Indian decoupling theory is failing miserably and intelligent investors are aware of this. One end we are talking about globalization and other end we are trying to prove the India decouple theory. This is the greatest Indian market paradox.
US markets were weak on Monday and Indian markets are expected to remain weak today. I am not sure about the market direction and hence would not bet on bull market or bear market. As far as I am concerned, I have identified good stocks from investment and trading perspective and I am not too worried about the theories at this moment. Any theory will work for me as long as I have some cash flow into my account at the end of the day!
If I would trade, I would go long on Indian bank, Karnataka bank, Sun pharma and Reliance communications but not at the current price. I would wait the price to come down a bit and then only will take the call. As usual I would be trading with a strict stop loss as I would like to retain my capital for tomorrow as well.
Reliance Power - Listing on Feb 11
Feb 11 is a big day for Indian stock market as the largest ever IPO is listing on that day. There were expectations of a great listing (800-900) during mid Jan but subsequent market crash had cast a shadow on grey market pricing. As the market direction is not clear, it would be difficult to predict the listing price now.
Retail investors have got 15, 16 0r 17 shares each. I got my pie:). Let’s wait for the big day!
Retail investors have got 15, 16 0r 17 shares each. I got my pie:). Let’s wait for the big day!
Sunday, February 3, 2008
There is Tomorrow
US markets ended on a positive note on Friday and Asian markets are rallying today morning indicating a gap up opening in Indian markets as well. As of now, this looks like a pull back rally and buying blindly is not recommended. Everything depends upon the global market now. If, US markets crash today, there will be a crash everywhere tomorrow. Taking a trade position beyond the day is just a gambling in the current market scenario.
It is better to stay away from the market till market stabilizes. Reliance IPO refund will be a positive to the market as some money will enter into the market. There will be listing of Reliance power this week which is another trigger to the market.
There was a buying in IT stocks last Friday and I have read some research reports suggesting a buy in IT stocks. I am not yet convinced with the theory that IT stocks are underpriced. I expect more downside and would not enter into IT stocks till there is clarity on US economy front.
Traders may find good opportunity to make money in stocks like Educomp, Axis bank, kotak bank, L&T, reliance communication etc. For ordinary investors this is the time to sit down and watch the market movements rather than buying in a hurry. As always, there is tomorrow and I am optimistic that tomorrow will be bright for patient investors.
It is better to stay away from the market till market stabilizes. Reliance IPO refund will be a positive to the market as some money will enter into the market. There will be listing of Reliance power this week which is another trigger to the market.
There was a buying in IT stocks last Friday and I have read some research reports suggesting a buy in IT stocks. I am not yet convinced with the theory that IT stocks are underpriced. I expect more downside and would not enter into IT stocks till there is clarity on US economy front.
Traders may find good opportunity to make money in stocks like Educomp, Axis bank, kotak bank, L&T, reliance communication etc. For ordinary investors this is the time to sit down and watch the market movements rather than buying in a hurry. As always, there is tomorrow and I am optimistic that tomorrow will be bright for patient investors.
Time to Bank on the Banking sector
As I wrote many times in my blog, I am extremely bullish on banking sector for this year and banks have not disappointed my faith as most of the banks have declared excellent third quarter results.
The immediate trigger for banking stocks is cut in interest rate which is going to happen within next three months.
There are over 20 listed public sector banks and close to 20 listed private sector banks. It is a nightmare to track all these banks for retail investors. The wise strategy is to buy banking sector mutual funds to make sure that we don’t miss the bus this time.
Fortunately, when it comes to banking sector mutual funds there are only two mutual funds to consider viz, Reliance banking fund and UTI thematic banking fund. Both these funds have performed well in the last one year giving about 70% returns. I would be buying both these funds in equal quantities. UTI fund has more allocation to private banks compared to Reliance banking fund. Also UTI holds stocks like Reliance banking fund (growth) is available at about Rs 64 and UTI thematic banking fund (growth) is available at around Rs 33.
I will have definitely more weight age to banking stocks this year in my portfolio. Apart from the above mutual funds I have following stocks in my wish list. Axis bank, ICICI bank, Karnataka Bank, Kotak bank, South Indian bank, ING Vysya bank, Bank of Maharastra, Dena bank, Vijaya bank, Syndicate bak, Indian bank, HDFC.
Indian bank and Karnataka bank are at 52 week high and looks very strong in the current market. Both look good from trading perspective also. Indian bank can be bought at around 200 with a stop loss at 180 and Karnataka bank at around 260 with a stop loss at 240.
The immediate trigger for banking stocks is cut in interest rate which is going to happen within next three months.
There are over 20 listed public sector banks and close to 20 listed private sector banks. It is a nightmare to track all these banks for retail investors. The wise strategy is to buy banking sector mutual funds to make sure that we don’t miss the bus this time.
Fortunately, when it comes to banking sector mutual funds there are only two mutual funds to consider viz, Reliance banking fund and UTI thematic banking fund. Both these funds have performed well in the last one year giving about 70% returns. I would be buying both these funds in equal quantities. UTI fund has more allocation to private banks compared to Reliance banking fund. Also UTI holds stocks like Reliance banking fund (growth) is available at about Rs 64 and UTI thematic banking fund (growth) is available at around Rs 33.
I will have definitely more weight age to banking stocks this year in my portfolio. Apart from the above mutual funds I have following stocks in my wish list. Axis bank, ICICI bank, Karnataka Bank, Kotak bank, South Indian bank, ING Vysya bank, Bank of Maharastra, Dena bank, Vijaya bank, Syndicate bak, Indian bank, HDFC.
Indian bank and Karnataka bank are at 52 week high and looks very strong in the current market. Both look good from trading perspective also. Indian bank can be bought at around 200 with a stop loss at 180 and Karnataka bank at around 260 with a stop loss at 240.
Saturday, February 2, 2008
Blue Star - Fundamental and Technical Analysis
Blue Star is India's largest central air-conditioning and commercial refrigeration company with an annual turnover of Rs 1607 crores.
Blue Star's major products includes packaged air-conditioning, industrial packaged chillers, shell and tube condensers and coolers, air handling units, finned condensers and evaporators.
The main customers of Blue star are Banks, Builders, Cinema / Multiplexes, Dairy, Educational Institutions, Hospitals, Hotels, Industrial Applications, IT / ITES, Malls, Offices, Pharma, PSU / Government, Restaurants / Eateries, Showrooms / Retail Outlets, Telecom. If we believe in India's consumption lead, capex lead economic growth, and Blue star should be part off one's portfolio.
Blue star is a very investor friendly company and before 2000, it has rewarded investor's with Bonus issues (almost every time it was liberal 1:1) once in every four years. It is a good dividend paying company as well. In 2007, there was a stock split and currently the face value of the stock is Rs 2. Investor's are well rewarded by way of stock split also as after stock split, the share price jumped from Rs 140 to current price of Rs 500.
The current equity is 17.99 crores. Blue star has a huge reserve of about 200 crores and the EPS for year 2008 is about 14. Historically, Blue star has rewarded share holders with bonus issue whenever the EPS is more than 10.
Blue Star has recently bagged an Rs 38 crore order for air-conditioning India’s first indigenously designed 500 Mw fast breeder reactor from Nuclear Power Corporation of India (NPCIL) for the Kalpakkam project. This order will be executed in the next 2 years. Apart from this, Blue star has orders worth over 1000 crores from from Ahmedabad Airport, Thiruvananthapuram Airport, Pantaloon Retail, Bangalore, Cognizant Technologies, Bengal Greenfield, Kolkata, RBI, Guwahati, DuPont, Secunderabad, Bengal Peerless, Kolkata, Moser Baer, Noida, HCL Technologies, Gurgaon, 2 Square Mall etc. I have unconfirmed news that Blue star has also got huge orders from Infosys, Mangalore, where Infosys is building a huge campus.
Snapshots of financial results for the last four quarters are as follows.
March 2007, 36% increase in sales, 34% increases in Net Profit
June 2007, 48% increase in sales, 206% increases in Net Profit
Sept 2007, 40% increase in sales, 150% increases in Net Profit
Dec 2007, 40% increase in sales, 208% increases in Net Profit
The trailing four quarter EPS is 11.53 and the current P/E is 42. With the expected EPS of about 14 for year ending March 2008, the P/E works out 35. From a purely P/E perspective stock looks expensive at the current price of 490 but with the visibility of orders for the next 2 years, capex lead economic growth in India and with the expected bonus, one can accumulate the stock at every dip. It has to be noted that stock was almost resilient to the Jan market crash. Even on the black Monday where sensex crashed by over 2000 points, only 9000 stocks of Blue star traded at around Rs 420, against the average daily volume of 25,000 stocks.
Also from a technical perspective, Blue star is above its 30, 50 and 200 day moving averages, showing significant strength.
Note: Blue star is part of my portfolio during this writing. There may be price fluctuations in the price based on general market volatility and it is good time to buy this stock.
Study Notes:
Those who have read 'One up on the wall street’ by Peter Lynch can try to understand how common stocks can be picked up by common investors just by observing the company and our environment. It is not a complicated business to understand.
Those who are following William O Neil's CANSLIM approach can try to apply the CANSLIM technique to this stock. Most of the CANSLIM criteria are met for this stock.
And finally, technical analysis enthusiast's can see the bullish signal by applying the 3 point moving average technique or 2 point moving average technique. Stock is also well above the 200 day moving average.
Blue Star's major products includes packaged air-conditioning, industrial packaged chillers, shell and tube condensers and coolers, air handling units, finned condensers and evaporators.
The main customers of Blue star are Banks, Builders, Cinema / Multiplexes, Dairy, Educational Institutions, Hospitals, Hotels, Industrial Applications, IT / ITES, Malls, Offices, Pharma, PSU / Government, Restaurants / Eateries, Showrooms / Retail Outlets, Telecom. If we believe in India's consumption lead, capex lead economic growth, and Blue star should be part off one's portfolio.
Blue star is a very investor friendly company and before 2000, it has rewarded investor's with Bonus issues (almost every time it was liberal 1:1) once in every four years. It is a good dividend paying company as well. In 2007, there was a stock split and currently the face value of the stock is Rs 2. Investor's are well rewarded by way of stock split also as after stock split, the share price jumped from Rs 140 to current price of Rs 500.
The current equity is 17.99 crores. Blue star has a huge reserve of about 200 crores and the EPS for year 2008 is about 14. Historically, Blue star has rewarded share holders with bonus issue whenever the EPS is more than 10.
Blue Star has recently bagged an Rs 38 crore order for air-conditioning India’s first indigenously designed 500 Mw fast breeder reactor from Nuclear Power Corporation of India (NPCIL) for the Kalpakkam project. This order will be executed in the next 2 years. Apart from this, Blue star has orders worth over 1000 crores from from Ahmedabad Airport, Thiruvananthapuram Airport, Pantaloon Retail, Bangalore, Cognizant Technologies, Bengal Greenfield, Kolkata, RBI, Guwahati, DuPont, Secunderabad, Bengal Peerless, Kolkata, Moser Baer, Noida, HCL Technologies, Gurgaon, 2 Square Mall etc. I have unconfirmed news that Blue star has also got huge orders from Infosys, Mangalore, where Infosys is building a huge campus.
Snapshots of financial results for the last four quarters are as follows.
March 2007, 36% increase in sales, 34% increases in Net Profit
June 2007, 48% increase in sales, 206% increases in Net Profit
Sept 2007, 40% increase in sales, 150% increases in Net Profit
Dec 2007, 40% increase in sales, 208% increases in Net Profit
The trailing four quarter EPS is 11.53 and the current P/E is 42. With the expected EPS of about 14 for year ending March 2008, the P/E works out 35. From a purely P/E perspective stock looks expensive at the current price of 490 but with the visibility of orders for the next 2 years, capex lead economic growth in India and with the expected bonus, one can accumulate the stock at every dip. It has to be noted that stock was almost resilient to the Jan market crash. Even on the black Monday where sensex crashed by over 2000 points, only 9000 stocks of Blue star traded at around Rs 420, against the average daily volume of 25,000 stocks.
Also from a technical perspective, Blue star is above its 30, 50 and 200 day moving averages, showing significant strength.
Note: Blue star is part of my portfolio during this writing. There may be price fluctuations in the price based on general market volatility and it is good time to buy this stock.
Study Notes:
Those who have read 'One up on the wall street’ by Peter Lynch can try to understand how common stocks can be picked up by common investors just by observing the company and our environment. It is not a complicated business to understand.
Those who are following William O Neil's CANSLIM approach can try to apply the CANSLIM technique to this stock. Most of the CANSLIM criteria are met for this stock.
And finally, technical analysis enthusiast's can see the bullish signal by applying the 3 point moving average technique or 2 point moving average technique. Stock is also well above the 200 day moving average.
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