Jul 28, 2018

Oil India Ltd. Trading View For Short Term


Oil India Ltd. Trading View For Short Term

Oil India Ltd CMP is 211. We expect a short term jump in across board oil marketing firms. They have been falling on the back of rising crude oil prices and general market decline over the last 6 months.
Oil India Ltd’s is coming out with good results, and so we believe with the other OMCs as well. There is also a great case for technical bounce back from the continuous decline and oversold situation. We recommend to play with Call and Put options rather than futures which is more safe, strategic and profitable, with positional view. With the decisive attire of the central government to not pile up subsidy losses in OMCs and the easing of crude oil prices, we believe that OMCs are likely to stay neutral to positive from this levels onwards. Even trying to touch its nearby resistance of 50 and 100 DMA on daily charts; OIL can go to 220, 230 levels.

The given views are subject to change depending on changing market and global economic conditions. Become member to benefit from market and individual stock moves. Become member to get alerts for buy and sell with targets.


Jul 26, 2018

GAIL stock price movement update for traders and investors


GAIL stock price took decent support around 300 level in recent market decline and since in steady uptrend forming rounding bottom pattern in a prevailing uptrend.
Target on the upside could be 390, its old high and then can rise above 400 to make new highs subsequently. Decline below 350 is not expected. In case of any adverse stock specific news we can see decline below. We also have news flow related to hiving off its different businesses, so will have to look out regarding those developments as well.
Gail is a huge oil and gas segment PSU, otherwise plagued by the rise and fall in global natural gas prices.

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Jul 21, 2018

Playing Chess OR Trading Markets, One Must


Playing Chess OR Trading Markets, One Must


·         Focus on the process
·         Keep their fears and anxieties in check
·         Not worry about unseen threats they can’t control
·         Understand the nuances of conflict
·         Enter their decisions somewhere between “instinct and reason”
·         Not defy the lessons of history

A game of chess is pure. It is a free market with a level playing field and a product of spontaneous action, not human design. Unfortunately, one cannot say the same in reference to the markets.

THE CONCEPT OF STOPLOSS AND AVERAGING IN INVESTING : What To Do When Your Stock Price Comes Down?


THE CONCEPT OF STOPLOSS AND AVERAGING IN INVESTING

Stoploss and averaging are concepts that a regular trader knows very well. Stoploss is a price level where the trader ‘stops losing’ in any trade. While averaging out or averaging down is if not opposite of it but falls way on the other side of the meaning of stoploss. It means to increase the trade size when the trade is in loss. For example, trade X has bought 1000 shares at price of Rs.100 and, the stock falls to 95; he had decided to make maximum loss of 5000 and so he exists at 95. Here 95 was stoploss. Now if X decides to buy more 1000 or certain quantity at this declined price or at a little more lower price of 90 for example then he is said to be ‘averaging’ his position.
Averaging is considered to be one of the top five trading mistakes. And (to keep) stoploss is considered to be one of the top 5 important requisitions for successful trading.
So, thus these both are concepts in trading. But in investing there is this presumption that you do not require stoploss. Yes, averaging out is seen among many investor. Averaging out is employed many times as part of their basic investing strategy or as a contingency. However, it is a fact that no investor buys a stock imagining that it is going to come down 50% or more, as averaging at decline of at least 25% or more is only prudent. You can see how, stoploss concept is rejected simply when investor opts to keep the strategy of averaging in his arsenal of tools of success in investment. We have explained 3 stages of investing in another article. This practice comes at the stage of managing investments. We will not call it new investment. When you have bought 1000 shares of X Ltd at 100 and buy 1000 or so more at say, 70 or 50. Now your average or cost price on all 2000 shares is not 100 but 70 or whatever.
Are we in favour of averaging? Of course yes. We believe it to be one of the most important concepts to be considered and used by investors for success in investing world and gaining good returns. Does this have pit falls, yes it does. In fact Watrren Buffett, the legendary investor, has said, you should not invest in a stock, which you cannot buy or will not want to buy when it may decline 50%. Same advice has been given in his lessons buy Indian value investing master late Shri Parag Parikh in his teachings. There are many ways to look at this concept. First is that you make sure that whatever you is you are buying at cheap prices or at good value. There is a good margin of safety. And even after that for any reason the price of it declines you should be willing (not compulsory) to buy it more. This states your confidence in your original purchase and also brings down your average buy cost, making it perhaps a further cheap buy. So now also you will probably need smaller rise to make money if you are looking at capital appreciation through rise in stock prices. See, averaging or buying more shares when your already invested share falls is not kind of compulsion, if you are not averaging out it doesn’t mean that your purchase is not cheap or you do not anymore have confidence in your investment into that company. You may just not choose to buy it more simply because you do not want to hold more than the number of shares you already have due to variety of reasons like the limitation of your capital, your overall sectoral or portfolio strategies and so on. You also have to do your research again in case any fundamental or other vital change has happened which itself demanded the stock price to come down to adjust to new lower valuations due to the development. In that case, you have to reconsider averaging out your investment in that stock or decide to average on further decline only when your average purchase costs becomes reasonably cheap.
I think we mostly discussed about averaging and not stoploss, it may seem. But we did. Stoploss, in our opinion is not a concept in investing. It may be for huge fund managers or hedge funds and so on. But for retail guys like you and me. Following the averaging strategy is better than following stoploss strategy. They are not strategies per se, but approaches. Yes, if you device them calculatively into your investment planning then they become important parts and parcel of it. See, the huge funds have to cut losses, they have to show quarterly profits, sometimes they bet big on speculative stocks and growth stocks with steep valuations. So they know when they have baught at 50 PE, and if its coming down they get out at 35 PE, because they are sure that now its going to get worth 20 PE or something. So, they hit the sell button and get out of the investment position. Another thing to keep in mind here is that with huge funds, they have trading and investing concepts all blurred up mostly. We are not talking about long only and long term funds. All other funds are aimed at profits. If they are making good money they get out. And may be buy again. So logically concept of stoploss seems to fit in their investing strategy. But for retail guys like us, its best to enter an investment with complete prudence and good valuations etc.along with readiness to average at lower levels (unless ofcourse, you are investing like them hedge funds for short term or for a targeted return only and have predecided to get out of the particular stock in case of a fall of so and so percentage. But in that case we don’t call it pure investing or long term investing. We should know it by short term trading. That is the right word. As it is not either pure trading nor pure investing). The whole base is that you can not put stoploss while investing because you are buying the stock with full cash and not in margin and you are buying it for longer duration and it is not for intraday or till next expiry. These are technical reasons apart from the basic arguments of value investing. Many of you will say what if a company, when we invested say, before some months is no longer worth investing and the fundamentals have changed and so on. Do we still hold it or exit at some so called stoploss and save the rest of capital?. Yes and no. Because you should have thought it out before investing. Why did you buy such stock and at such rate. See, 80 pc of time unless it is a market meltdown or recession, stocks do perform well and if your company is doing well it is unlikely that it is going down from the price of you investment even after that price is a good bargain price. Also as an investor you have to keep one thing in mind which is that over the short period the price of a stock just like a commodity is driven by demand and supply rule. But over the long term it is driven buy demand-supply rule and valuations. Here we are pointing out at the stock price where it reaches over the period of years after building bases in technical terminology and not the price range it gyrates over the period of days or months and doesn’t stabilize there. Now coming back to the point. If you have to exit because some of your stock is down and out and the firm is not going to recover or the sector has seen a huge fundamental shift towards worst then you got to do what you got to do. For e.g if you had Kodak, or some stock of satyam computer at reasonable price valuations, you had to exit at loss, making it a stoploss. But again like we said, if you predetermine all possible variations and follow prudent value investing rules and stick to the plan which ever you have made, you will likely not require to get puzzled with use of concept of stoploss in your investment ventures.
So, now you understand clearly, the concepts of stoploss and averaging in investing. The bottom-line is that you got to have a clear understanding of both and a very clear determination as to what are your approaches in regard with your investments, weather its pure investing or if some stocks you have bought is for short term without prudent investment valuations and you will exit it if it goes down certain points and so on. There is not much written or explained so far regarding these two concepts in investment arena. But knowledge of the same seems very necessary looking at the effects it can leave on your long term return on investments.

Jul 17, 2018

Indian Stock Market update as on 17 July 2018


Market update as on 17 July 2018

In our last week’s market update, we mention how Indian markets can touch 11000, the NIFTY life time high in the coming week and languish there. We saw that till the week ended 13th july, the market scaled to those highs with the help of Infosys, tcs, reliance industries, the hdfc twins and ITC with erratic individual stock moves in other stocks. We also foretold about the due bounce back in some frontline midcap and smallcap stocks. However that rally doesn’t seem to be holding at least as of now (as of this writing on Tuesday 17th july).
We continue to hold the same view that the market should rally due to 5 individual stocks which will continue to rally along with the IT sector. We believe traders should do positional trading in them by taking delivery or buying call options for July or may be now august month. The bounce back rallies in beaten up NBFCs and other counters fads fast so be careful to trade in them. We believe new highs can be made if 10950 level is sustained, in a couple of week only. We are fortunate that Dow and other global markets are also languishing and not tanking for reasons whatsoever. The usual suspects like IT, RIL, some autos and some specific stocks from different sectors which are strong and rising, will continue to perform so take long in them is prudent advice instead of advising to short in the already too much beaten up and oversold PSU, NBFCs, Infra, cement and such counters.

The given views are subject to change depending on changing market and global economic conditions. Become member to benefit from market and individual stock moves.

Jul 7, 2018

Indian & World Stock Markets Update & Status As On 7 July 2018


Indian & World Stock Markets Update & Status As On 7 July 2018

The Indian stock markets continued to remain sideways, during the week ended on 7 July 2018. The lack of sell off helped the new listings like RITES, FINE ORGANIC and VARROC to give 5-20% gains.
The global markets also remained sideways with erratic up and down moves of 1-2% on up and down both sides. One can argue that has been the behaviour of the market since last 2 months at least.
The lack of trend on either side across the financial markets had been due to the international and domestic factors like that of change in RBI stance regarding interest rates, USA central bank rate hike, Donald Tump implementing his tariff threats over China, China retaliation measures and further counter action threats, the upcoming 2019 Loksabha election in Indian and the toughness faced by the incumbent PM Narendra Modi. As far as the ‘uncertainty sell off’ is concerned, we have been witnessing it for almost last 5-6 months, which has digested; at least the initial panic orinigated by them factors.
Amid all these and the sideways or what we call a languishing market; the Chinese mainland market has corrected below 3000 mark which it was trying to hold on since many years. The present bear market which has been persisting since almost last 6 months, which had its roots in Trump Tariff Tantrum; is expected to continue in the second half of the calendar year 2018 as well. It is however noticeworthy and a sigh of relief for the investors that the Dow Jones (benchmark index of USA stock markets) has maintained its critical 200 DMA thrice after that. However, the other important indicators still signs towards vulnerabilities in the technical chart set up. Our research suggests that any strong upmove is not going to happen in near term in this global trend setting equity indice and this 9th year since bull market began is going to be a year of profit booking and uncertainty which is likely to be followed by the global counter parts, be it the developed ones of the EMs like India.  We also believe that the present non-stop upmove rally in USA markets is due to mainly factors such as 1). The very low base of 2008 crash 2). The liquidity flood post USA financial crisis provided by the developed central banks 3). The improving macro economic data in USA and Europe 4). The election of Trump government which promised and implementing as well upon its corporate tax cuts, and ‘america first’ economic agendas.
We believe that the rally is taking a breather this year. The stocks rally in Europe could be backed by its own strength of macro and micro economic indicators. While the Asian economies, as usual and as always, continue to remain non-trending and non-decisive in whole global ball game of equity markets and vulnerable as they were to foreign funds flow, of which India has seen as much as USD 1 billion and USD  6 billion in debt markets, the highest in first half of any years in a decade. This clearly says something about the world markets changing trends and global investors’ changing portfolio settings.
We, however believed that there has to be a small cap and mid cap as well as large cap stock technical bounce back rally, of which some already started in last week trade. We believe this should be taken as an opportunity for longer term investors to invest in cement, entertainment, oil gas, real estate and some select stocks as they are available at cheap valuations.
Indian economy is just coming out of two huge economic disruptive events of note ban and GST while the LTCG also impacted and continue to impact the investments fraternity’s decision making esp.the FPI ones.
We think that the Indian markets would continue to languish around the present life time highs of NIFTY 11000 and SENSEX 36500 during the time until Mr. Modi is likely re-elected as PM. We have seen many jokes doing rounds in social networking that NIFTY is at 10800 but the portfolio of investors looks like NFTY of 8000. This has happened due to the sell off in mid cap and small caps while few large caps like HDFC, RIL, Maruti etc. continued to drive the benchmark indices up or at least maintained it near the life highs. So, this irony would continue to remain, and that is why we always suggest the lay investors to take advice of professional experienced investment advisory for their ventures into stock investing and trading.
The given views are subject to change depending on changing market and global economic conditions. Become member to benefit from market and individual stock moves.

Jul 1, 2018

News For Next Week : 1 July 2018 : What Would Impact The Indian Stocks Markets In Next Week l Indian Stock Markets For Next Week Analysis


Spooked by trade war worries, a sinking rupee and rise in crude oil prices, Dalal Street investors joined their global peers in a sell-off exercise. Although, the bulls made a comeback on Friday, the week belonged to the bears. Equity benchmarks Sensex shed 0.74 per cent during the week to end at 35,423 while NSE's Nifty bled 1 per cent to settle at 10,714. 
Indian markets continued to remain mostly sideways amid the expiry week technicalities and continueing lack of triggers from world or domestic sphere. Midcap and smallcap as well as largecaps from most of sectors continued to remain weakish and corrective excepting few stocks that are strong the likes of IT majors and minors as well as few index and non index counters which saw bounce back. It is an irony for the investors, both short, and long term that the benchmark indices are almost around the lifetime highs, and that too despite the lustreless global markets movement; but their portfolio looks like that of 20% or more correction type valuation. Anyways, we expect the markets to continue to languish for this month as well just like we predicted about May and June month about ‘erratic moves’, ‘intraday trades’, ‘1-2% gains trades’, and ‘range trading’ type of sideways market.

Trade Tariffs: Import tariffs announced by the US President Donald Trump on Chinese products will come into effect on July 6. Earlier in June, Trump laid out a list of more than 800 strategically important imports from China that would be subject to a 25 per cent tariff starting on July 6, including cars. In response to it, China’s Commerce Ministry had said it would respond with tariffs “of the same scale and strength” and that any previous trade deals with Trump were “invalid. Reuters reported China would impose 25 per cent tariffs on 659 US products, ranging from soyabeans and autos to seafood. Canada has also vowed to impose retaliatory tariffs on US imports from July 1 

Rupee: The domestic unit touched its nadir in the week gone by. Although, it made a sharp recovery on Friday, it is still Asia's worst-performing currency this year. 
According to Moody’s Investors Service, RBI's efforts to tighten the availability of rupees in the market and halt a slide in the currency may squeeze profitability of the country’s lenders as it raises their funding costs, Bloomberg reported. 

Crude prices: Oil posted biggest weekly rise in more than two months on shrinking stockpiles and supply disruptions from Canada to Libya. Futures advanced 8.1 per cent last week in New York, above London-traded Brent crude’s gain of 5.1 per cent, Bloomberg reported. The world’s two most important oil benchmarks - Brent and WTI are diverging as Saudi Arabia’s pledge to lift output weighs on the European market, the report said 

Macro data: India's manufacturing sector data for June is slated to release on Monday. The Nikkei India Manufacturing Purchasing Managers Index (PMI) fell from 51.6 in April to 51.2 in May. Services sector data for June will be unveiled on Wednesday. Services activity witnessed a slowdown in May as the Nikkei India Services Business Activity Index fell to 49.6 from 51.4 in April. 

Auto stocks: Shares of auto companies will be in focus as the automakers will start releasing sales numbers for June from Sunday. Auto companies continued to register robust sales in May, driven by rural demand and government's infra push. Maruti Suzuki NSE 0.62 % India, a leader in passenger vehicles, sold a total of 172,512 units in May, an increase of 26 per cent while Tata Motors NSE 2.26 % registered a strong growth of 58 per cent YoY at 54,295 units, against 34,461 units.

Stock-specific actions: Last week saw some big-ticket developments in individual names. First, IRDAI approved LIC’s plan to buy 51 per cent stake in IDBI Bank. The life insurer is expected to invest Rs 10,000-13,000 crore in tranches in the state-run lender. This apart, Tata Steel NSE 3.52 % and Germany’s Thyssenkrupp signed final agreement on Saturday to establish a long-expected steel joint venture. In addition, state-run Punjab National Bank (PNB) sold its entire stake in ratings firm Icra for a consideration of Rs 109 crore. 
New kids on the block: Shares of RITES and Fine Organic Industries will list on the bourses on Monday. Initial public offerings of both the companies, which ran from June 20 to June 22, saw huge investor demand. While Railways consultancy firm RITES' public offer was subscribed a mega 67 times, Fine Organics issue was subscribed nearly 9 times. 

Tech factors: The Nifty50 index on Friday settled above its 50-day moving average. In the process, it formed a large bullish candle on the daily chart, similar to a ‘Long White Day’ and would face resistance at other key short-term moving averages in the 10,730-10,750 range. If Nifty continues to show similar strength in the next session, then the possibility of bottom formation at Thursday’s low of 10,557 will be much higher. The same can be confirmed with a close above 10,785
However, VK Sharma, Head - Private Client Group & Capital Markets Strategy, HDFC Securities, believes it would be too early to define it as a bullish trend reversal. Traders should only take aggressive longs once Nifty closes above 10,850, Sharma advises. 

US jobs data: Investors across the globe will keep an eye on the US jobs data for June, which is scheduled to be released on July 6. The US economy continued to add jobs at a solid pace in May, with nonfarm payrolls rising 223,000 and the unemployment rate falling to an 18-year low of 3.8 per cent.