Options Trading Report as on 12/05/2012

We have seen a major correction in the Indian stock market, Due to the government change in France and some uncertainties in European markets. Regarding clarification of GAAR of India, it was a very big positive factor for the market. But market just want a single negative news and react very badly. This is proves that it was predicted earlier. As NIFTY has corrected from 5500 to 4900. It has fallen down 600 points. In percentage terms 11%, where as mid cap stock have fallen up to 50 %. Here are some of those stocks.

Scrip	February	May	Decrease in %
Nifty	5500	4900	-11%
Igl	500	210	-58%
Hdil	120	65	-46%
Suzlon	35	19	-45%
LITL	20	12	-40%
Unitech	35	21	-40%
Sintex	100	58	-42%
Gvkpil	18	11.5	-36%
Delta corp	82	55	-35%
Hcc	27	18	-34%
Relcap	420	280	-34%
Rcom	100	67	-33%
Jsw energy	65	43	-35%
Ivrcl	75	51	-34%
Punj Lloyd	62	43	-30 %
Gmrinfra	30	21	-30%

If market recovers 5 percentages or in points terms, if nifty recovers from 4940 to 5200, we might see the recovery in this stock more then 50 of the above fall of the market. so from 4940 level chances of going down is 35 % and chances to go up to level of 5100 is 45 and 20 % will be at the same level in the month may.

We are seeing a very heavy continues selling from FII’S. they are changing the direction of the market.. Another reason is from Europe but it is going to calm down. But we will not see immediate recovery, but at least selling will be either low or stopped. So it is a good time for buying in fundamentally strong company. Moreover in 2009 nifty recover from 4950 level. And in 2010 nifty increases from 4980 level and in 2012 also nifty is getting a support from the level of 4950. So it is becoming a last support of nifty which is very strong and nifty should trade in the range of 4950 to 5100 for the month of may

Midly bullish strategy of nifty

Buy nifty call of strike price 5000 at  63

Sell  nifty call of strike price 5100 at 31

Buy nifty put of strike price 4900 at 85

Sell nifty put of 4800  at 53

Total premium paid will be 63 + 85 – 31 – 53 = 63 * lot size 50 = 3150

No stopp loss requires as we are seeing a trading range of 4900 to 5100. At both place investor will earn the money.

Trading strategy for bank nifty :-

Bank nifty is showing some kind of resistant at the current level. So it will be the buying opportunity for the trader. They just can buy at current level for the target of 9800 to 10100 for the may expiry.

Buy bank nifty at current level or use below strategy

Buy call of bank nifty of 9600 strike price at 140   

Sell call of bank nifty of 9700 strike price at 110

Buy put of 9200 strike price 162

Sell put of 9100 strike price around 135

No stop loss is required as strategy covered for both of the trend.

Maximum risk will be net premium paid = 140 + 162 – 110 – 135 = 57 * 25 = 1425

Reward will be un limited. low risk and high return

Buy infra and contruction stock or use below strategy.

Buy Hdil call 70 strike price at 1.90

Unitech call 22.5 strike price at  0.65

Both stock has been crushed from its recent high 35 %

So we might see a recovey of 10 % in two weeks.

Total risk is very low [1.90 * 2000 = 3800 + 8000 * 0.65 = 5200] = 9000

Target for hdil call = 5 rs

Target for unitech call is = 1.25rs

Maximum possible return would be 10000 + 10000 = 20000

So investment around 9000 profit could be around 11000

Might gives profit more then 100 % in one week

Pair trade power sector :

Rel power 100 strike price call at 1.90

Tata power 100 strike price call 1 rs         

Total investment is [1.90 * 2000 = 3800 + 4000 * 1 = 4000 ]= 7800

Target for both stock is rpower 4.5 rs , tata power 3 rs

Maximum profit 4.5*2000 = 9000 + 4000 * 3 = 12000 = 21000

Investment 7800

Return possible 21000

Risk reward ration is very much favorable

Find details of our options trading advisory product below,

http://www.meghainvestments.com/options_calls.html

India FM Pranav Mukherji rolls back so-called draconian provisions of Budget 2012-13

Finance Minister announced to roll back so-called draconian measure to implement provisions of GAAR (general anti avoidance rules) during the discussion in parliament on Finance Bill, 2012, on 7^th May 2012. This came as a big relief for the market participants and especially p-notes and FIIs investing/trading on Indian exchanges via Mauritius. Markets recovered from more than 300 points losses on this announcements on Monday, however declined sharply 2% on Tuesday, undoing all the expected and deemed positive impacts of this announcement.

Below are the main highlights:

ü  GAAR provisions deferred for a year.

ü  Investment in start ups by angel investors exempted from tax.

ü  Goods already taxed by states to be exempted from service tax.

ü  Withdrawal of 1% levy on jewellery.

ü  1% TDS withdrawn on transfer of immovable property.

ü  Long term capital gains tax on PE investors cut to 10%.

Web Review: www.NSEIndia.com, Official Website of National Stock Exchange of India Ltd

Stock exchange or bourse is a mutual organization which provides facilities for stock brokers and traders, in trading company stocks and other securities, and for the issue of redemption of securities and other financial tools and capital events like the payment of income and dividends. Stock Exchanges in India also assist the issue and release of securities and other monetary tools incorporating the fortification of revenues and dividends. National Stock Exchange of India is India’s largest Stock Exchange and World’s third largest stock exchange in terms of transactions. In this article we are going to give review on www. Nseindia.com  which is the official website of National Stock Exchange India Ltd.

NSE website has proved as a boon not only for the investors but also for the aspiring financial professionals seeking proper training and education in financial markets. The main objective behind NSE is to establish trading facility nationwide for all types of securities. It also ensures equal access to all investors in the country through the process of an appropriate telecommunication network. NSE was able to achieve its objectives within a very short span of time. NSE has national reach to major market segments like equity or capital markets, futures and options or derivatives market, wholesale debt market, mutual funds, initial public offerings and so on. NSE provides an easy access to all the important information related to financial instruments.

Important Quotes from Warren Buffett's 2012 Letter to Shareholders

Warren Buffett's 2011-12 annual letter to shareholders, here are important quotes from it.

On value: "The logic is simple: If you are going to be a net buyer of stocks in the future, either directly with your own money or indirectly (through your ownership of a company that is repurchasing shares), you are hurt when stocks rise. You benefit when stocks swoon. Emotions, however, too often complicate the matter: Most people, including those who will be net buyers in the future, take comfort in seeing stock prices advance. These shareholders resemble a commuter who rejoices after the price of gas increases, simply because his tank contains a day's supply."

On market moves: "Here a confession is in order: In my early days I, too, rejoiced when the market rose. Then I read Chapter Eight of Ben Graham's The Intelligent Investor, the chapter dealing with how investors should view fluctuations in stock prices. Immediately the scales fell from my eyes, and low prices became my friend. Picking up that book was one of the luckiest moments in my life."

Indian Stock Market Outlook as on 11/02/2012

VIEW CAUTIOUS FOR TRADERS: EXITING LONG POSITIONS ADVISABLE OR LONG NEXT MONTH 4800 PUT

MONTHLY PATTERN NOT IN FAVOUR OF BULLS.
MEDIUM TERM UPTREND STILL INTACT, HOWEVER NIFTY MUST NOT BREAK BELOW 5110 AND END CORRECTION BEFORE THE NEW EXPIRY.

                                 The NSE Nifty spot closed at 5333.55 up by 113 points and BSE Sensex closed at 17503 up by 2.09% on weekend. Metal stocks ended the week with notable losses despite turning in an impressive performance on Weekend. A weak trend in global metal prices due to demand concerns following a downward revision in Chinese growth target spooked metal stocks. Sterlite Industries, Jindal Steel, Hindalco and Tata Steel all ended the week with sharp losses. Reliance Industries, Bhel, Gail , Bharti Airtel, NTPC & Tata Power also closed on a weak note last week. Among the gainers in the Sensex, Tata Motors, Maruti Suzuki, Wipro, HDFC, ITC, ICICI Bankand Coal India gained modest ground in positive territory. Multi Commodity Exchange (MCX) shares made an impressive debut on Weekend. The IPO from the company had received an overwhelming response, getting subscribed more than 54 times. On the NSE, the stock rose to Rs 1428.55 in early trades & despite losing some ground as the session progressed, closed at Rs 1294, up more than 25% from its issue price. In economic news, India's exports grew an annual 4.3% to $24.6 billion in February, while imports grew 20.6% to $39.8 billion. The trade deficit widened to $15.2 billion during the month from $14.8 billion in January. Total exports are seen in the range of $292 billion to $298 billion for the 2011/12 fiscal year that ends on March 31.

Warren Buffett' Views on Gold: "Gold Speculative Instrument"

Many people always wanted to know about the legendary world investors or investment saint, as he is also known, Warren Buffett’s views on gold.

Warren Buffet on gold: Recently Warren Buffett has given some controversial views on gold. Buffett, in his latest remarks, has said gold is inferior to stocks and bonds and more of a speculative item than investment instrument.

In his annual letter to Berkshire Hathaway shareholders, published Feb. 25, Buffett states:

“Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce — gold’s price as I write this — its value would be about $9.6 trillion. Call this cube pile A.

MAKE YOUR INVESTMENT COST ZERO: Practical Lesson for Investing

Making Investment Cost Zero.

This is interesting. You may think that how it is possible to make investment cost zero. This can be done in reality. When the markets are bottoming out and rising to mark the beginning of the run up, the stock prices rise 20% to more than 120% in few weeks and months time period. This is basically because the stock prices are already ruling at multi months and in many cases multi year lows. The stocks which were in triple digits are now available in double of even single digits! These stocks and even the better ones out of this lot attract a lot of investment and trading attraction.

So the prices rise in a manner as told earlier in this paragraph. Now, when you are entering in markets at an early stage of the price rise cycle,
You get the stocks at good price. Suppose you invested Rs.1 lakh in 10,000 Lanco Infratech shares at Rs.10 and it rose to 20 rapidly then you can offload 50% i.e 5,000 shares and thus get back your original investment amount. So now the rest of 5,000 shares that you hold are absolutely cost less as your original investment capital is out of them. Now whatever monetary benefit as to bonus shares, dividends, or price rise you get is absolutely free is can be measures as ‘infinite return’ on investment, as your investment is practically ‘zero’ in it!

Another way your cost of investment can be zero is to hold blue chip investment for a longer duration. For
e.g. those who are holding reliance industries or grasim or even hind unilever for that matter, for more than 10 years now are indeed holding it for free. Because the price appreciation, dividends and bonus shares etc. in aggregate have given them more than their investment amount.
So, the conclusion is that the advice to pull out sum of initial investment capital after rise in share price can be a general advice to retail and fearful investors.  While the cost of investment long term investment in large cap, blue chips, and value investing stocks automatically becomes zero over the longer term if invested at good valuations.

This concept can be explained in some more ways. Any ways, this concept is one of the very essential practicals that an investor should be aware of.

World Steel Production up 6.8% in 2011

World steel production rose 6.8% last year to a record 1.53 billion tonnes, the World Steel Association said, .
Growth was 8.9% in China, 7.1% in the US, 1 per cent in Germany, 5.7%, in India and 17 per cent in Turkey, the Brussels=based group said in a report on its website on Monday. While, Japan 's steel production fell 1.8%.

UK unemployment rate rises to 16 year high

               The economically troubled UK's unemployment rate has rise in November at 8.4% as per Office of National Statistics figures, which was highest since January 1996. The unemployment rate is calculated based on International Labour Organisation methods. 

This Stock will double in about 12 months

Do you see the chart below?
The name, targets and fundamental research report are given to members of www.indianinvestorsclub.com


This stock will double in around 12 months. You can contact on 09377008708 for further details.

Dow Jones analysis:New high possible in next 2-4 years

Dow Jones analysis:New high possible in next 2-4 years

The Dow Jones index made recent bottom of 6470.11 on 6 march 2009 on the back of Subprime housing crisis and Lehman brothers bankruptcy.

The level it made on 2 may 20011, 12807.36 must cross to blast above to touch and cross life time high of 1 oct 2007, 14198.10 lifetime high.

It has crossed 12724.41 made on 21 july 2011, on on jan 23, 2012 and made high of 12764.41, but failed to close above the 12724.41 level and closed at 12709.20.

So now Dow jones has to cross and close above first 12724.41 and then 12807.36 made on 2 may 2011, a daily close above this will confirm dow Jones up move upto 13412 and weekly close will likely confirm the breach of the all time high made on 1 oct 2007 14198.10 and rise above it.

Is 5800 possible in H2 FY12?

Market Trend

Nifty has given a better than expected start in 2012 since investors focus has shifted from gloomy scenario of sovereign euro debt crisis to positive economic data of US economy. Nifty has given a spectacular performance, rallied from the low of 4588 to the high of 4899 in just 10 trading sessions!! My view on short term trend is bullish where markets can make a high of 5050-5100, with 5100 being the key resistance area. But the hindrance to the market rally could be weak quarterly earnings, depreciating rupee and any important news relating to Euro debt crisis. However S&P downgrade of 8 Eurozone countries (Thank god Germany was spared) will lead to consolidation of Nifty in next two or three sessions.

Investment classified into 4 on the basis of duration of investment

Now no confusion on what is short term investment and what is medium term and long term!

Read our unique classification of investment based on duration or period of investment.

Plan your investing activity based on our unique classification of investment based on duration of investment.

THE CONCEPT OF SHORT TERM, MEDIUM TERM, LONG TERM AND LONGER TERM INVESTMENTS:

Many (most in fact) investors are confused about equity investments. Main reason being the volatility of markets and the investor’s inability to manage his emotional response to it.           

Other than psychological/behavioral aspects, the investor is also devoid of basic understanding as simple and as basic as ‘what is asset allocation?’ and “what should be called long-term investing and what not?”

Here in this article we have clearly explained the classification of equity investments on the basis of duration of investment. The classification mainly include the

NIFTY SPOT TECHNICAL CHART

(Click on the chart for bigger view)

Nifty spot closed at 4713 with heavy profit booking and all short term long positions winding up as short Christmas vacation is coming up. As indicated a chart of nifty daily from mid 2009, we can see volatility of nifty index. In 2011,

Excerpts of Letter of Warren Buffett to Shareholders, year 1978

Excerpts from Warren Buffett’s Letter to Shareholders for year 1978

....We make no attempt to predict how security markets  will behave; successfully forecasting short term stock price movements is something we think neither we nor anyone else can do.  In the longer run, however, we feel that many of our major

equity holdings are going to be worth considerably more money

than we paid…

…Slow capital turnover, coupled with low profit margins on sales, inevitably produces inadequate returns on capital

Excerpts of Letter of Warren Buffett to Shareholders, year 1977

Excerpts/Key Learnings from Warren Buffett’s Letter to Shareholders for year 1977:

The excerpts are taken from the letter and not changed with words or sentences. References are given as and wherever necessary.

…After all, even a totally dormant savings account will produce steadily rising interest earnings each year because of compounding.

     …Except for special cases (for example, companies with unusual debt-equity ratios or those with important assets carried at unrealistic balance sheet values), we believe a more appropriate measure of managerial economic performance to be return on equity capital.

     …The textile business again had a very poor year in 1977.  We have mistakenly predicted better results in each of the last two years.  This may say something about our forecasting abilities, the nature of the textile industry, or both.

Fake Exports Scam?: Black Money coming back to India by exports-over-invoicing with help of government

In a report dated 10 Oct 2011, Sanjeev Prasad, Sunita Baldawa and Amit Kumar of Kotak, unearthed the possible export-scam amounting to even more than combined 2G, mines and all other scams.

The report said that in between 2008-09 and 2010-11, exports to the Bahamas jumped to $2.2 billion from $2.2 million. Yet, India’s share in Bahamas’ imports, which totalled $2.8 billion in 2010, is a relatively minor 7.5 percent. Thus, this 1000 fold in 2 yrs is no-doubt an issue which demands criminal investigation.

According to UNCTAD —The global trade and investments monitoring agency of UN— says, the number in no way matches the data on the Bahamas’ global imports, which, was $2.8 billion in 2010. There are more reasons to smell scam in these figures. The 29-island Bahamas have an economy not larger than $8 billion and a population of only 3,50,000.

These and other skyrocketing increase in ‘copper articles’ exports points that some black money might have been repatriated back to the country via ‘over-invoiced’ exports (done by billing high fake amounts for overseas transactions with fake buyers or shell companies) given that international scrutiny is increasing over unaccounted funds in Swiss bank accounts and other financial centres.

It is clear that how India could continue achieving blistering rates of growth in exports (almost more than 50 percent each month) when the US and Europe, two top export destinations, are clearly in major financial trouble.

Indians’ per capita income rises 2.5 times in a decade

From year 2001-02’s Rs.18450, the per capita income of average investor risen to Rs.54000 in 2010-11. The per capital income calculated at current prices registered an annual average growth rate of about 12.80% during this time period.