on Sunday, March 13, 2016
Technical Analysis Of Nfty50:

Buy Nifty For A Target Of 7701+. Stoploss At Your Own Risk Levels.


Investing and Trading in any equity,future,gold,silver,forex and crude-oil is risky. My recommendations are technical analysis based on & conceived from charts. The information provided is not guaranteed as to accuracy or completeness. This is my personal view only.

Please consult your adviser or consultant or analysts before investing and/or trading. We assume no responsibility for any transactions undertaken by them. The author won't be liable or responsible for any legal or financial losses made by any.

Fundamental analysis is Greek to many people but it’s the strong base on which a stock should be Bought. There have been many ways to analyze stocks like discounting cash flow or Dividend growth model or the market multiples model(earnings, sales, book value)
Analyzing stocks requires a lot of digging but I have created a small checklist for beginners which could help them self sufficient and take their own decisions.
So here is how you should go
1) There are two types of analysis- Top down and Bottom up
Top down means that first you shortlist the industry first, then you analyze lots of stocks from that particular industry and then final on a particular stock.

Bottom up is you pick the stock on a standalone basis and don’t do an industry analysis. Even if the industry is not doing well, you don’t care as you have picked the stock standalone on basis of its strong fundamentals.
You can choose whatever you are comfortable with but I will explain these in greater details in my later posts.

2) Stock markets have been built on two types of Investors or rather two thought of schools, one is called as value investors whereas the others are called as Growth investors. Yes Growth and Value , these are the two strong pillars on which everything works. So these are two criteria’s later which we will speak about in the post, and also what all ratios one should analyze in this huge world of ratios. I always prefer growth rather then value, but Growth plus Value together is Soney pe Suhaga.
3)What I have observed is people buy stocks just because they want to buy them or just matching someone or following someone blindly. There has to be certain triggers to buy a stock, this triggers could be:-
a) Reduced raw material prices(in this scenario cos having crude and metals as their raw materials benefitted). Reduced prices of raw materials will reduce the expenses and give a boost to operating profits and margins. Since cost of goods consumed is a major portion of the expenses, one should consider this as a strong reason
b) Expansion in capacities- This is an indication that company is growing and one could get increased sales and profits by some time( The imp point is to check how the expansion was funded, debt or equity or a combination of both).
c) Promoter adding aggressively- Who knows better then the owner of the company that how a company is going to perform. I have generally seen promoters buying in a co before the best is to come and aggressive promoter buying is one thing which makes me deep dig about the co and gives me confidence.
d) Quarterly results- Quarterly results are a great trigger and I have observed it is possible to make decent profits after buying after great results. But there is a catch here as well which is Valuations and prior rally. If the valuations are high and there is a prior rally as well, it means that the good quarterly results are already discounted in price.
e) Change in Govt policies- These could be also a trigger which one could look for. Recent news was Anti-Dumping duty from Bangaldesh jute products which started a new bull run in the Jute sector. So the role of an investor is to anticipate events or understands news and their significance before others do.
f) Exchange rate- This is a very common thing now which is known by most of the people. So whenever Dollar is getting high, its best to keep exporters in your portfolio who would benefit from Dollar rise and plan and construct your portfolio in a way that 70-80% of your portfolio is in exporters so your portfolio gets hedged against rising dollar and falling markets.
g) Macros- Tracking Macros of our country as well Macros of other countries is important. You should be aware of all happenings around you. Like recently China devalued its currency as it was slowing down so one should have avoided sectors/companies which export to China as it would effect them adversely. Also since China devalued its currency, its currency would become cheaper and so would the goods it produced would get more cheaper and attractive in the International markets vis a vis other goods, so in this scenario its best to avoid companies whose goods directly compete with Chinese goods.
Also one could have avoided Banking sector because RBI was issuing new banking licenses and there would be more competition in the banking sector, leading to lesser profitability in future. So one not only has to listen to news but also understand them well and its implications.
h) Fundamental screener- A stock would certainly catch my eye if it has a very good profit and sales growth and is low on valuations. I will give the fundamental screener in second part of my post as the post is getting too long now.
i) Interest rates- The interest rate is the rate at which Banks can lend money. Higher interest rates is used to contract(reduce) money supply in an economy by reducing borrowings. Banks certainly benefit from higher interest rates and industries like auto,housing, consumer durables, high debt industries disadvantage due to the same.
Similarly reduction in interest rates increase money supply in an economy and benefit sectors like auto, housing, consumer durables and high debt industries.

J) Tieups/ mergers- This could be another important trigger. Has the company tied up with some other company which would help the co gain a competitive advantage . Has the company tied up with a gaint of the sector? One should analyse the deal further, understand the beneficiary and then look at the company fundamentals before buying
k) Promoter issuing warrants at higher then cmp- Had recently seen this in kellton when the share was at 75 and promoters had issued warrants to themselves at 90. Promoters issuing warrants at higher price gives shareholders a belief and confidence about the future prospects of the company.
l) Change in management- It’s the management who sails the ships and its upto the management where they want to take the company. I have seen great companies with poor management resulting into lag in price. A change in management could be just the perfect thing to happen and it can be a trigger of change in fortunes of the company. A change in management will prompt me to track the company more closely.
m) New product line - A company releasing a new product line or launching its own brand, who knows it could be start of another mefa FMCG. Track the performance of the product line and the brand
All these factors cant be used on a standalone basis, they could be a potential trigger. You can not buy a share just because promoters have bought or raw material prices have reduced, you need to dig in more about the company and its financials which I will be highlighting in second part of the post.
This triggers could make me track the company but not buy the company, for buying I will have to do a detailed analysis….
But with the above post you yourself can make a watchlist for yourself
on Tuesday, March 8, 2016
Technical Analysis Of Nifty 50 :

Short Nifty For A Target Of 7252. Stoploss At Your Own Risk Levels.


Investing and Trading in any equity,future,gold,silver,forex and crude-oil is risky. My recommendations are technical analysis based on & conceived from charts. The information provided is not guaranteed as to accuracy or completeness. This is my personal view only.

Please consult your adviser or consultant or analysts before investing and/or trading. We assume no responsibility for any transactions undertaken by them. The author won't be liable or responsible for any legal or financial losses made by any.
on Monday, March 7, 2016
Many traders are simply putting in hours, thinking that if they spend a lot of time around the markets, analyzing charts, reading books and studying courses their skill level will improve. "Putting in hours" is necessary when you are starting out, as there is a lot to learn. But putting in hours won't necessarily increase your profit potential. If you always do the same thing, and make the same mistakes, putting in hours will just engrain those habits even more. To improve, make repeated and deliberate choices. Here are five thing to start doing today to improve your performance.

Get Help
Have someone in your life that makes you accountable for your trading. Call them your trading referee. Lapses in discipline can happen to anyone, so having someone in your life that keeps you accountable will keep those lapses to a minimum and the mistakes less costly.

This person could be a mentor, coach or a just a friend or family member (not necessarily a trader, but it could be) who you've told your plan to and who you keep updated on your performance. Often just knowing that you need to show your trades to someone--and that those trades have to align with the strategy you told them you were following--is enough for most traders to avoid some mistakes
A chat room, forum or regular meeting with people you respect is another option. Share what you are doing, what you are struggling with and what you are having success with. Ask for feedback. Anyone can get sidetracked, so be open to being told when you've gone astray. When your own discipline and self-awareness fail, you'll have someone to help you get on track.
Choose your trading referee carefully. Choosing the wrong person can do as much harm as good.
Avoid Other's Opinions on Trades
Talking about strategies with other traders, or discussing your performance with your trading referee is fine, but avoid the opinions of others when it comes to specific trades. Trade your trading plan, your way. It doesn't matter if a trader you respect says they are going to buy when your plan says to sell. You must follow your own plan. That is only way you can see what works for you, and keep your stress levels to a minimum.

Constantly changing your mind based on what other people, the news, TV or websites say will cause stress and lead to poor performance. Even great traders have many losing trades, so trust your own plan. Avoid discussions while you are trading that could cause you to second your positions, or abandon your methods all together. You put time into researching and creating your strategy. Don't let someone's else words ruin all that work.
A strategy may seem simple on the surface, but even a simple strategy is hard to implement in live market conditions. Every day, every trend, every pullback is slightly different; nothing looks exactly the same as it did in the textbook examples. To get proficient at implementing a method, practice it, a lot. Trade it in a demo account until you consistently see profit from it.

In sports you do drills to create muscle memory, so you can instinctively act when the time is right. In fast moving market conditions, if you have practiced a strategy, you'll be able to implement your skill at the right time. If you haven't practiced, you'll likely miss the opportunity, enter too early, or make mistakes with your position sizing. Build your skill base in practice sessions, so you're not learning the hard lessons when real money is on the line.
Mental Clarity, Everyday
Each day take one minute before you trade to make sure you are feeling clearheaded, focused and present. Also take a couple seconds to reiterate that you're here to trade, not check your social media accounts, email or watch videos online. When you trade, focus on trading. Close your eyes, center your attention on your trading plan and visualize following it. Check the economic calendar to be aware of events that may move the market, so you aren't taken by surprise during the day.

These small steps can save you thousands of dollars over the course of a year. If you're angry, upset or unfocused, avoid trading. It only takes one day, one trade even, to lose an entire account when not in the right mind frame.
Take a few minutes and prepare for each day. Foster a state of mental clarity before you begin trading, and if you can't establish that mental clarity, don't trade that day.
Record Every Trade You Make
Monitor and review every trade you make. Take screenshots of your trades with entries, stop loss levels, targets, and your technical/fundamental notes so you can easily review your trades at a later time. A screenshot is worth 1000 words in a trading journal, because it shows exactly what you did in those exact market conditions.

To take a screenshot, click on the chart you want a picture of and hit Alt+PrtSc (print screen). Open any image editing software, such as Paint, and paste the screenshot. Save the file with a name in the format of day/month/year, which keeps a chronological record of all the trades you've taken.
If you're a day trader, review your trades weekly and monthly. If a longer-term trader, establish a time where you'll review your trades, such as quarterly or semi-annually. If your trades last a long time, take a screenshot at the time of the trade, and a screenshot when you get out (showing everything that happened between entry and exit).
Careful review of your trades will show what your common mistakes are--which you can deliberately work on to improve (practice)--and what you're very good at, which you could potentially capitalize on more.
The Bottom Line
Being a profitable trader takes constant work. Profitable trading is not a destination; it's only a state made possible by deliberate and practiced actions and choices. As soon as a trader stops following those deliberate and practiced actions, they will fall out of the profitable state. Having someone to keep you on track will help keep these lapses to a minimum. So will avoiding the opinion of others on particular trades. Be focused every day you trade, and if you are not don't trade that day. Finally, record everything you do, taking screenshots and keeping notes. This will give you definitive feedback you can use to continually and deliberately improve your trading methods
on Sunday, March 6, 2016
INDIAN STOCK EXCHANGE. A few men, started one association under a banyan tree for trading some commodity/security in 1875 !! Who knew at that time that it would grow and would become NSE/BSE? Interesting? 

Read some finest events and milestones of Indian Stock Exchange.

To study the history of the capital market in India we have to look back in eighteenth century when East India Company started security trading in India. Security trading in India was unorganised during that time. Until the end of nineteenth century, scene was same. Two chief trading centres were Calcutta and Bombay now known as Mumbai and Kolkata. (It has to be mentioned, if you do not want apologize later). Out of them Bombay was main trading port. During American civil war (1860), Bombay was at important centre where essential commodities were traded. Because of heavy supply those days prices of stocks enjoyed boom period. Probably, the first Indian stock exchange boom period. It lasted for almost 5 years. After those booming period Indian stock exchange faced the first bubble burst on July 1st 1965. 

During that time trading in stock market was just a concept, a thought, an idea. It was limited to 12-15 brokers only. There market was situated under a banyan tree in front of the Town hall in Bombay. These brokers organised an association, of course informal in nature, in 1875. Name of the association was “Native Shares and Stock Broker Association”. Very few visionary could feel that it was starting of the great history of Indian stock exchange. After 5 decades of the incidence, the Bombay stock exchange was recognized in May 1927 under the Bombay Security contracts Control Act, 1925. But still the exchange was not well organised as British Government was not willing to see India as rising nation.

After independence, 1st priority of Indian government was development of the agriculture sector and public sector undertakings. Public sector undertakings were healthier for sure but they were not listed in stock exchange. In first and second five year plan, capital market was not a goal for Indian government. Moreover, the controller of capital issues closely controlled many factors for new issues. It was one reason and big enough to de-motivate Indian corporate to stay away from the idea of going public.

In 1950s, some good companies listed in the exchange were brokers’ favourite. Some of them were Century Textile, Tata steel, Bombay dyeing, Kohinoor mills. They were favourite not because of any technical or fundamental reason. The brokers enjoyed trading in these scripts as it was operated by operators. Slowly the stock exchange was given one new name “Satta Bazaar”! But surprisingly, despite of speculation, defaults cases were very few. In 1956, the government passed the Securities Contract Act.

In 1960s, Indo China war happened. And it was starting of bearish phase in stock exchange. This bearish trend was aggravated by the ban in 1969 on forward trading and badla. Badla was technically contracts for clearing. Financial institutes helped to boost the sentiment by injecting liquidity in the market. In 1964, the first Indian mutual fund came in market, named the Unit Trust Of India.

In 1970s , badla trading was resumed again under another form of hand delivery contracts. But in 1974, 6th of July was the day when capital market got one bad news. Government introduced the Dividend Restriction Ordinance; this rule was restricting the payment of dividend by companies to 12 per cent of the face value or one-third of the profits of the companies that can be distributed. (Whichever was lower.)!! Stock market crashed again. Stocks went down by 20% and the market was closed for nearly a fortnight. The sentiment of stock market was same until the optimism came in market with when the MNCs were forced to dilute majority stocks in their company in favour of Indian public. Many MNCs left India. But 123 MNCs offered shares were lower than its intrinsic value. It was the first time Indian public had opportunity to invest in some of the finest MNCs. In 1977, Mr Dhirubhai Ambani knocked the door of Indian stock exchange and it was probably the turning point not only for Indian stock exchange but for Indian economy.

In 1980s, Indian stock exchange witnessed blasting growth period. Indian public discovered lucrative opportunities in stock exchange. It was the time when people who did not even know what is stock exchange, investing in the same. The growth doubled with the government liberalization process in mid 1980s. It was the time when convertible debentures and public sector bonds were popular in market. New stock market entries like Reliance and LNT re-defined Indian stock market scenario. Such factors enlarged volume in stock exchange. 1980s can be characterized by huge increase in the number of stock market, listed companies and market capitalisation.

The 1990s can be described as the most important decade in the history of Indian stock market. Everyone was talking about liberalisation and globalisation. The Capital Issue Act of 1947 was replaced in 1992. SEBI was emerged as a new regulator of the market. FII is coming to India and re-rating India as one of the most attractive market in world. Number of new stock exchanges was rising in county. Private sector mutual funds were welcome in market. Some very big scams of Indian scam history took place in 1990s. The impact of such incidence was very deep. Indian investors drove their money out of market for some years. Positive side , these scams opened Indian government eyes. New technology new systems were introduced in Indian stock exchange. The Bombay stock exchange had two new competitors in market. OTC was established in 1992 and NSE was established in 1994. The national security clearing corporation (NSCC) and National securities depository Limited (NSDL) were established in 1995 and 1996 respectively. In 1995—1996 Option trading service was started. Rolling settlement was introduced in India in early 1998. Number of participation in stock exchange was rising with new segments for trading, new products and new technology. 1990s is known as era of Indian IT companies too. Wipro, Infosys, Satyam were some of the favourite stocks. Telecom and Media sector also rising during the same time.

Indian market welcomed Y2K with scam of Ketan Parekh. After that scam Badla system was banned in Indian market and rolling settlement was introduced in all scripts. Future trading was started in June 2000. In February 2000, Internet trading was permitted, all these events changed picture of old stock market. In 2001, UTI suspension of sale and re-purchase of its famous scheme US-64. It created panic in market. One big incidence of VSNL disinvestment took place in February 2002. In 2003, the government took decision to privatize PSU banks and it was market buster again. In 2000s, FII money started coming in Indian market like never before. NSE volume crossed BSE volume during the same time. Global meltdown hit Indian market in late 2007 and throughout 2008. Big Satyam Scam was exposed in 2008 again and it hit investor’s spirit badly. Since 2nd quarter of 2009 we have been watching up move trend for market again, after positive election result in India. Investors are again coming in market. Same happened after Modi win.

It has been a long volatile journey for the Indian capital market. Now the capital market is organized, matured, fairly valued, nicely regulated and more global. The Indian market is one of the most attractive markets today which gives stable high rate of return compared to other countries. In terms of technology Indian equity market is one of the best in the world too. Computer and telecom sector advances and Internet is shattering geographic boundaries. Internet is giving wide range of investors and Internet is also used to provide better level of information. The best example, we can say because of Internet I am able to write this article and you are reading this article on this site.

If you like the article, do not forget to give your valuable comment for the same. Stay with us for more on Indian stock market.
on Saturday, March 5, 2016
1. Go for companies with low debt ratio (preferably less than one)
2. A high interest coverage ratio (above 3x) and a high return on equity are big advantages
3. Avoid companies with huge liabilities in the form of foreign currency convertible bonds / external commercial borrowings
4. Look at the quality of the management, its governance standards and how investor-friendly the company is.
5. Mid-cap and small-cap companies can be future market leaders, so be patient with your investments
Those who wish to invest in small-cap stocks should do so only if they have a long investment horizon and tolerance for volatility. Small-cap stocks suffer the steepest falls in a bear market and rise the most in a bull market. An investor should stay invested for at least three-five years to allow their portfolio to gain from at least one bull run.

Benefits of Investing in Small Caps

1. Huge growth potential: The first and the most important advantage that a small cap stock gives you is their high growth potential. Since these are small companies they have great scope to rise as opposed to already large companies.
2. Low Valuations: Usually small cap stocks are available at lower valuations compared to mid & large caps. Hence, if you invest in good small cap companies at initial stage and wait for couple of years, you will see price appreciation not only because of growth in top line and bottom line but also due to rerating which happens with increase in market capital of the company.
3. Early Entrance Advantage: Most of the fund house and institutions do not own small caps with low market cap due to less liquidity which make it difficult for them to own sufficient no. of shares. This gives retail investors an opportunity to be an early entrant to accumulate such companies shares. When company grows in market cap by delivering consistent growth and becomes more liquid, entry of fund houses and institutions push the share prices up giving maximum gains to early entrants.
4. Under–Researched: Small cap stocks are often given the least attention by the analysts who are more interested in the large companies. Hence, they are often under - recognized and could be under-priced thus giving the investor the opportunity to benefit from these low prices.
5. Emerging Sectors: In a developing economy where there are several new business models and sectors emerging, the opportunity to pick new leaders can be hugely beneficial. Also the disruptive models in the new age is leading to more churn and faster growth amongst the nimble footed smaller companies.

Concerns while Investing in Small Caps

1. Risk: The first and the most important disadvantage a small cap stock is the high level of risk it exposes an investor to. If a small cap company has the potential to rise quickly, it even has the potential to fall. Owing to its small size, it may not be able to sustain itself thereby leading the investor into great loses. After all, the bigger the company, the harder it is for it to fall.
2. Volatility: Small cap stocks are also more volatile as compared to large cap stocks. This is mainly because they have limited reserves against hard times. Also, it in the event of an economic crisis or any change in the company administration could lead to investors dis-investing thereby leading to a fall in prices.
3. Liquidity: Since investing in small cap stocks is mainly a decision depending upon one’s ability to undertake risk, a small cap stock can often become illiquid. Hence, one should not depend upon them for an important life goal.
4. Lack of information: As opposed to a large cap company, the analysts do not spend enough time studying the small cap companies. Hence, there isn’t enough information available to the investor so that he can study the company and decide about it future prospects.