Mar 20, 2010


Book Profit.
Over priced/under weight.

About the Company:
Castrol India is the largest private sector lubricant company in India with nearly 21 % market share.
The Co. produces engine oils for automotive, industrial and marine & energy segments. In the auto segment, company provides diesel engine oils to trucks, tractors & off-road equipment; gasoline engine oils to passenger cars for 2-stroke & 4-stroke oils to motorcycles & 3-wheelers. In the industrial segment, company caters to the metals, auto & machine manufacturing segments.
The Co. has very popular brands which include Castrol Active 4T, Castrol RX Supermax, Castrol CRB Turbo, Castrol Magnatec, and Castrol Power
The Co. has tie up with original manufacturer like maruti, tata motors, hero Honda, jcb, mahindra, BMW, VW, MAN, Audi, Volvo and Renault to sale its products.

Having good brands, good profit margins, clients, and yes debt-free status; why one should book profit/avoid investments OR why are we underweighting share of this company?

Lest look at the financial of the company.
Debt-free status is good for long term sustainable growth.
The stock is trading at P/E multiple of 30 which is high for the the engine oil company.

While valuing a debt free company with investments guru warren buffet style we look at the cash flow per share. Stock is trading at 26 time of the cash flow per share which is much higher at current levels.
Return on net worth (RONW) and Return on capital employed (ROCE) are excellent.

Strong brand, high return on capital but valuation parameter are high like P/E multiple and cash flow with this look at the main raw material crude oil which is constantly rising and it is expected to rise further so this will hit margin significantly in future so at this levels stock is trading at high priced and we underweight the stock and advising to book profit/avoid new investments.

Recommendation: Avoid this fund, because the fund fails to deliver good return and underperforming its bench mark.
Support at 5130/5050/4990.
Resistance at 5303/ 5360/5410.

Last week we had give sell call on nifty fu and stop loss get triggered. We had created hedge position by buying call options of different strike price so we have covered most of losses.
Market is rising with lots of liquidity pumping By FIIs and domestic’s institutions (many time told in my fundamental analysis).
After constant rise from budget we are still below last high of 17800 and 5300 respectively for Sensex and Nifty. Yes, we have not broken the lower bottom of 15300 and 4500 for nifty but we need to cross and substation above 17800 and 5300 with very good volume.
If the above condition happens then we have given Elliott wave analysis of “common flat a-b-c” pattern and which can take Sensex to 19300/19600 and in last leg it can cross 21000 mark also.
But we need to sustain above 17800 for quite some time say for 4 consecutive weeks, last time after Dubai-fall Sensex has taken out the 17500 levels but it sustained above 17500 for 2 weeks and panic started; so this time we need to close above 17500 for at least 4 week thereafter we will see the next up move from hear.

In technical analysis every penny counts, still after such a rise we have not cross the high and in my last report I have argued about “head and shoulder” pattern and if we are not able to cross the high 17800 and 5300 then problem is their and doors for down side is open so remember my following words

“The rule of the game (stock market) is to be in direction of major trend and get out when the trend has reached the stage where almost everyone has become complacent and careless.”

Everything is described in above three lines and we advise you to book profit if you have invest money before budget (yes we were telling in every report this is buying opportunity) and put all your money in to liquid mutual fund schemes and enjoy vacation and come back if Sensex close above 17800 for 4 consecutive weeks.

Dow Jones-
It is trading at crucial resistance levels of 10500 to 11500 levels, so be careful on higher side.

S&P 500-
For this broader index, the major resistance area is 1178; if it closes three consecutive + weekly closes above 1178 then it will move further. As per time series this is 13 month from low of 675.

Friends, the market is at high speed and if you don’t wear helmet while you running motorcycle at speed of 100, then your life is at risk.
Hear we suggest you some trading calls but we also suggest you to buy April month put option to hedge you buying position because market is running on high speed and any single bed news will create vertical fall and you may loose significantly.
Hedge by,
Buy April month 5000 put trading at 44.
Buy April month 4900 put trading at 29.
Buy one lot of each with total premium of 3650

Trade in half quantity what you regularly trade in market in following stocks:
Cairn India Ltd.
Stock broken triangle, buy with stop loss 270 targets 303

Mercator lines Ltd.
This stock has given breakout from inverted head and shoulder pattern; buy with stop loss 56 targets 70.

Reliance infrastructure Ltd.
Buy with stop loss 1010 target 1044/1050.

Sesa goa
Buy with stop loss 437 targets 470/490.

Aditya Birla Nuvo
This stock broken inverted head and shoulder pattern; buy with stop loss 850 targets 930/960.
ALERT: We expect profit booking in jai corp, Indian hotels, hind copper and hindalco. So we suggest avoiding going long in these scrips.

" I don't want a lot of good investments, I want a few outstanding ones."
-Phill Fisher, Famous Successful investor.

Advantage Of Early Investments

Dear investors,
Many Times you all have read about multi-bagger stock or rising stars and many investments companies gives example about early investments that how small companies became big corporate and successful business. Let’s see some example of the same,

Change in share prices over the past 10 years:

Price of 15/12/1999
Price of 15/12/2009
Aban Offshore
Era infra
Shriram transport
Kalpataru power

      Now tell me are you a person who has invested in any of the company for the above given period? Ask the track of analyst who is suggesting you to invest in stock market.
      Let me give you track of our research team who has experience of more than 7 year and his family has experience of 40 years ,how they spot the long opportunity at low levels or early stage of the business or early stage of economy.

Tata power
Tata steel
Reliance ind (demerger)
Values adjusted for merger/
Demerger/bonus/split etc

      Now see the gain after long term, many analyst or economist including we believe Indian economy will grow but which stock or companies are worth to buy and beat the stock market in the long run? Like warren buffett, rakesh junjunwala, ramesh damani, ramdeoo agrawal.
      Try and find out the Companies with negligible revenue from core operation but with mega plans under implementation are worth a look.
      Few companies have little or nothing to show by way revenue and profit from their core business operations. Many of these companies have mega future plans that could completely transform the company, its business profile and size of operations.
Investing in such stocks makes sense before their core business goes on stream and start contributing to the top line as immediately after this it is most likely that such stocks would witness re-rating and rise further.
       Before investing in such companies, investors can try to reduce risk by focusing on various aspects of the industry and company. Such as management credentials, project implementation skills and experience, corporate governance norms, financial backing by group, industry dynamics and size of the business opportunity etc
We don't have to tell that in past we have find out HIDDEN GEMS of the future at early stage of the business like tata power, tata steel, reliance group, larson and tubro and more.
        Now if you feel that you or your family not enough lucky like , ramesh damani,rakesh junjunwal, ramdeoo agrwal who always find out "diamond" at early stage of the business/economy like gillette, mcdowell, find out by ramesh damani, praj ind or beml find out by rakesh junjunwals, hero honda and bharti find out by ramdeoo agrwal or hdfc bank find out by sameer arora of Helios capital then don.t worry we have find out the next"HIDDEN GEMS"or "DIAMOND" at early stage of the business and ready to become big business in terms of revenue and profit in the next decade .
You can SUBSCRIBE IN OUR NEW PMS SERVICE-4 ACE for above long term opportunity.

Please feel free to contact me on,