We will be back by 1st Jan, 2008 with a bigger , better interface to post solid information about market and interact with my readers !!!
till then ....
WISH YOU A VERY HAPPY & PROSPEROUS NEW YEAR !!!
December 27, 2007
December 15, 2007
Grey market premium - Dec IPO
eClerx Services 270 to 315 60 to 65
BGR Energy 425 to 480 375 to 380
Transformers & Rectifiers 425 to 465 280 to 290
Brigade Enterprises 351 to 390 100 to 110
Jyothy Lab. 690 215 to 220
Burnpur Cement Ltd. 12 5 to 6
BGR Energy 425 to 480 375 to 380
Transformers & Rectifiers 425 to 465 280 to 290
Brigade Enterprises 351 to 390 100 to 110
Jyothy Lab. 690 215 to 220
Burnpur Cement Ltd. 12 5 to 6
Short term stocks
- Ambica Agar Aroma - cmp 22 - tgt 55 (2 months)
- Rishabh Digha ltd - cmp 20 - tgt 45 (1 month)
- Frontier Information & technology - cmp 6 - tgt 25 ( 2 months)
Stocks Accumulation - Medium term
- Power Finance Corporation
- ICICI Bank
- HDFC Bank
- RCap
- Yes Bank
- Centurion Bank
- Bank of Baroda
December 10, 2007
Stock calls -10/12/2007
1. Prefer Media & Entertainment stocks for a period of 12- 18 months, such as
a) Adlabs
b) PVR
c) WWIL
d) Inox
e) UTV
f) Balaji Telefilms
g) Network 18
2. REL can see an upside of 10-15% on account of Reliance power IPO hitting the market in Jan
3. GMR is coming out with power IPO.This will have positive effect on GMR infra.
GMR has also forayed into SEZ and ports.In short term,stock may correct as it has run up
from 180 levels.Stay invested and reap rewards in form of value unlocking.
4. TATA STEEL is looking good for medium term.Short term,this stock might correct 7-10%.
Buy on dips for medium term target of 985-995
5. ALOK INDUSTRIESThis stock is range bound b/w72-80.
Stock has potential to cross 100,keep target of 110 and stay invested.
Infrastructure arm of ALOK is trigger point and also reason of stock appreciation(value unlocking).
6. IFCI -125-133 short term target -Hold IFCI for 18-24 months.Our price target is 280-325.If Goldman Sachs takes controlling stake,target is revised to 640-700.
7. ITC-This stock will be star performer of Year 2008.We expect demerger news and we are very bullish on ITC,especially its retail model -E-choupal.
Stay invested,one year target of 270-285.Better if you hold for 2 years.
a) Adlabs
b) PVR
c) WWIL
d) Inox
e) UTV
f) Balaji Telefilms
g) Network 18
2. REL can see an upside of 10-15% on account of Reliance power IPO hitting the market in Jan
3. GMR is coming out with power IPO.This will have positive effect on GMR infra.
GMR has also forayed into SEZ and ports.In short term,stock may correct as it has run up
from 180 levels.Stay invested and reap rewards in form of value unlocking.
4. TATA STEEL is looking good for medium term.Short term,this stock might correct 7-10%.
Buy on dips for medium term target of 985-995
5. ALOK INDUSTRIESThis stock is range bound b/w72-80.
Stock has potential to cross 100,keep target of 110 and stay invested.
Infrastructure arm of ALOK is trigger point and also reason of stock appreciation(value unlocking).
6. IFCI -125-133 short term target -Hold IFCI for 18-24 months.Our price target is 280-325.If Goldman Sachs takes controlling stake,target is revised to 640-700.
7. ITC-This stock will be star performer of Year 2008.We expect demerger news and we are very bullish on ITC,especially its retail model -E-choupal.
Stay invested,one year target of 270-285.Better if you hold for 2 years.
3 ways to stay on top of stock market
With stock markets oscillating wildly, the bigger concern for investors is to protect their investments over the downturn, rather than clock aggressive growth during the upturn.
Protecting your investments in a falling market is easier said than done. It involves taking on that precise quantum of risk that can spur your investments in a rising market and cut losses in a falling market.
While this sounds very difficult (and it is, even the best fund managers often struggle in striking this sweet balance between risk and return), we have not one, but three ways for you to stay on top of stock market volatility.
1. Good old balanced funds
Balanced funds, if you still remember them, are asset allocation investments. They invest across equity and debt markets (minimum 65% of assets in equities), which leaves them well placed to serve three objectives:
Shift across asset classes based on the best available investment opportunities.
Use the debt component intelligently to de-risk the equity portfolio during volatility in equity markets.
Book profits in equities regularly which again de-risks the equity portfolio by capping the level.
Like balanced funds, monthly income plans (MIPs), offer a similar investment proposition, although to a lesser extent. Since MIPs usually invest 15%-25% of assets in equities they are suited for investors with low-to-medium risk appetite.
In a falling market, when being fully invested in equities can prove perilous, a balanced fund with a 35% debt component might just be what the doctored ordered.
2. Investing through SIPs
Unlike balanced funds, which are usually ignored, SIPs have been widely adopted by investors. The reasons are not far to seek. Investing Rs 500-1,000 every month is a lot easier on the wallet than investing (a minimum of) Rs 5,000 lump sum.
By investing smaller amounts at regular intervals, you can reduce the average cost of your mutual fund investments over a market cycle. This is possible because when markets are volatile, SIPs activated during that period lower the overall average cost of purchase.
So investors who have opted for the SIP route welcome the volatility in stock markets and look forward to more of it going forward.
3. Always stay diversified
When markets are on the rise and everything appears hunky dory, that's when investors are most prone to make mistakes. That is the time when various high risk investments like thematic/sector funds are spawned.
Since a rising tide lifts all boats, most fund houses are quick to respond to a rally by launching high risk investments like thematic funds which they otherwise would not have launched.
Taking on higher risk pays rich dividends in a rising market, which explains why investors are prepared to risk their monies in a thematic fund that they would otherwise not have done.
Don't believe us? Compare the number of investors who invested in technology/software funds in 1999-2000 (before the tech crash) with those who invested in them in 2000-2002 (after the crash). Once the tech crash had set in, technology funds were the most reviled investments.
On the other hand, investors who were invested in well-diversified equity funds were relatively better off in the face of market volatility.
We see a similar situation emerging at present. Investors are going all out to invest in infrastructure funds ignoring the higher risk and the fact that they are in the midst of a stock market rally which enables such funds to generate above-average returns.
If the markets were to correct sharply, themes like infrastructure could be the hardest hit making investors in thematic funds wish that they had invested in diversified equity funds instead.
source: rediff.com
Protecting your investments in a falling market is easier said than done. It involves taking on that precise quantum of risk that can spur your investments in a rising market and cut losses in a falling market.
While this sounds very difficult (and it is, even the best fund managers often struggle in striking this sweet balance between risk and return), we have not one, but three ways for you to stay on top of stock market volatility.
1. Good old balanced funds
Balanced funds, if you still remember them, are asset allocation investments. They invest across equity and debt markets (minimum 65% of assets in equities), which leaves them well placed to serve three objectives:
Shift across asset classes based on the best available investment opportunities.
Use the debt component intelligently to de-risk the equity portfolio during volatility in equity markets.
Book profits in equities regularly which again de-risks the equity portfolio by capping the level.
Like balanced funds, monthly income plans (MIPs), offer a similar investment proposition, although to a lesser extent. Since MIPs usually invest 15%-25% of assets in equities they are suited for investors with low-to-medium risk appetite.
In a falling market, when being fully invested in equities can prove perilous, a balanced fund with a 35% debt component might just be what the doctored ordered.
2. Investing through SIPs
Unlike balanced funds, which are usually ignored, SIPs have been widely adopted by investors. The reasons are not far to seek. Investing Rs 500-1,000 every month is a lot easier on the wallet than investing (a minimum of) Rs 5,000 lump sum.
By investing smaller amounts at regular intervals, you can reduce the average cost of your mutual fund investments over a market cycle. This is possible because when markets are volatile, SIPs activated during that period lower the overall average cost of purchase.
So investors who have opted for the SIP route welcome the volatility in stock markets and look forward to more of it going forward.
3. Always stay diversified
When markets are on the rise and everything appears hunky dory, that's when investors are most prone to make mistakes. That is the time when various high risk investments like thematic/sector funds are spawned.
Since a rising tide lifts all boats, most fund houses are quick to respond to a rally by launching high risk investments like thematic funds which they otherwise would not have launched.
Taking on higher risk pays rich dividends in a rising market, which explains why investors are prepared to risk their monies in a thematic fund that they would otherwise not have done.
Don't believe us? Compare the number of investors who invested in technology/software funds in 1999-2000 (before the tech crash) with those who invested in them in 2000-2002 (after the crash). Once the tech crash had set in, technology funds were the most reviled investments.
On the other hand, investors who were invested in well-diversified equity funds were relatively better off in the face of market volatility.
We see a similar situation emerging at present. Investors are going all out to invest in infrastructure funds ignoring the higher risk and the fact that they are in the midst of a stock market rally which enables such funds to generate above-average returns.
If the markets were to correct sharply, themes like infrastructure could be the hardest hit making investors in thematic funds wish that they had invested in diversified equity funds instead.
source: rediff.com
8 reasons why stock market traders lose money
Many people think trading is the simplest way of making money in the stock market. Far from it; I believe it is the easiest way of losing money. There is an old Wall Street adage, that "the easiest way of making a small fortune in the markets is having a large fortune."
I discuss below eight ways of undisciplined trading which lead to losses. Guard against them, or the market will wipe you out. I am qualified to speak on this subject because I was myself an undisciplined trader for a long time and the market hammered me into line and forced me to change my approach.
1. Trading during the first half-hour of the session
The first half-hour of the trading day is driven by emotion, affected by overnight movements in the global markets, and hangover of the previous day's trading. Also, this is the period used by the market to entice novice traders into taking a position which might be contrary to the real trend which emerges only later in the day.
Most experienced traders simply watch the markets for the first half of the day for intraday patterns and any subsequent trading breakouts.
2. Failing to hear the market's message
Personally, I try to hear the message of the markets and then try to confirm it with the charts. During the trading day, I like to watch if the market is able to hold certain levels or not.
I like to go long around the end of the day if supported by patterns, and if the prices are consistently holding on to higher levels. I like to go short if the market is giving up higher levels, unable to sustain them and the patterns support a down move of the market.
This technique is called tape watching and all full-time traders practice it in some shape or form. If the markets are choppy and oscillate within a small range, then the market's message is to keep out.
Hearing the message of the market can be particularly important in times of significant news. The market generally reacts in a fashion contrary to most peoples' expectation. Let us consider two recent Indian events of significance.
One was the Gujarat earthquake that took place on 26 January 2001 and the other the 13 December 2001 terrorist attack on the Indian parliament. Both these events appeared catastrophic at first glance. TV channels suggested that the earthquake would devastate the country's economy because Gujarat has the largest number of investors and their confidence would be shattered, making the stock market plunge.
Tragic as both the events were, the market reacted in a different way to each by the end of the day. In both cases the markets plunged around 170 points when it opened, in both cases it tried to recover and while it managed a full recovery in the case of the Gujarat earthquake, it could not do so in the Parliament attack case.
The market was proven correct on both counts. The Gujarat earthquake actually held the possibility of boosting the economy as reconstruction had to be taken up, and also because most of the big installations, including the Jamnagar Refinery, escaped damage. In the case of the attack on parliament, although traders assessed that terrorist attacks were nothing new in the country but the market did not recover because it could see some kind of military build-up ahead from both India and Pakistan. And markets hate war and uncertainty.
In both these cases what helped the cause of the traders were the charts. If the charts say that the market is acting in a certain way, go ahead and accept it. The market is right all the time. This is probably even truer than the more common wisdom about the customer being the king. If you can accept the market as king, you will end up as a very rich trader, indeed.
Herein lies one reason why people who think they are very educated and smart often get trashed by the market because this market doesn't care who you are and it's certainly not there to help you. So expect no mercy from it; in fact, think of it as something that is there to take away your money, unless you take steps to protect yourself.
3. Ignoring which phase the market is in
It is important to know what phase the market is in -- whether it's in a trending or a trading phase. In a trending phase, you go and buy/sell breakouts, but in a trading phase you buy weakness and sell strength.
Traders who do not understand the mood of the market often end up using the wrong indicators in the wrong market conditions. This is an area where humility comes in. Trading in the market is like blind man walking with the help of a stick.
You need to be extremely flexible in changing positions and in trying to develop a feel for the market. This feel is then backed by the various technical indicators in confirming the phase of the market. Undisciplined traders, driven by their ego, often ignore the phase the market is in.
4. Failing to reduce position size when warranted
Traders should be flexible in reducing their position size whenever the market is not giving clear signals. For example, if you take an average position of 3,000 shares in Nifty futures, you should be ready to reduce it to 1,000 shares.
This can happen either when trading counter trend or when the market is not displaying a strong trend. Your exposure to the market should depend on the market's mood at any given point in the market. You should book partial profits as soon as the trade starts earning two to three times the average risk taken.
5. Failing to treat every trade as just another trade
Undisciplined traders often think that a particular situation is sure to give profits and sometimes take risk several times their normal level. This can lead to a heavy drawdown as such situations often do not work out.
Every trade is just another trade and only normal profits should be expected every time. Supernormal profits are a bonus when they -- rarely! -- occur but should not be expected. The risk should not be increased unless your account equity grows enough to service that risk.
6. Over-eagerness in booking profits
Profits in any trading account are often skewed to only a few trades. Traders should not be over-eager to book profits so long the market is acting right. Most traders tend to book profits too early in order to enjoy the winning feeling, thereby letting go substantial trends even when they have got a good entry into the market.
If at all, profit booking should be done in stages, always keeping some position open to take advantage of the rest of the move. Remember trading should consist of small profits, small losses, and big profits. Big losses are what must be avoided. The purpose of trading should be to get a position substantially into money, and then maintain trailing stop losses to protect profits.
Most trading is breakeven trading. Accounts sizes and income from trading are enhanced only when you make eight to ten times your risk. If you can make this happens once a month or even once in two months, you would be fine. The important point here is to not get shaken by the daily noise of the market and to see the market through to its logical target.
Remember, most money is made not by brilliant entries but by sitting on profitable positions long enough. It's boring to do nothing once a position is taken but the maturity of a trader is known not by the number of trades he makes but the amount of time he sits on profitable trades and hence the quantum of profits that he generates.
7. Trading for emotional highs
Trading is an expensive place to get emotional excitement or to be treated as an adventure sport. Traders need to keep a high degree of emotional balance to trade successfully. If you are stressed because of some unrelated events, there is no need to add trading stress to it. Trading should be avoided in periods of high emotional stress.
8. Failing to realise that trading decisions are not about consensus building
Our training since childhood often hampers the behaviour necessary for successful trading. We are always taught that whenever we take a decision, we should consult a number of people, and then do what the majority thinks is right. The truth of this market is that it never does what the majority thinks it will do.
Trading is a loner's job. Traders should not talk to a lot of people during trading hours. They can talk to experienced traders after market hours but more on methodology than on what the other trader thinks about the market.
If a trader has to ask someone else about his trade then he should not be in it. Traders should constantly try to improve their trading skills and by trading skills I mean not only charting skills but also position sizing and money management skills. Successful traders recognise that money cannot be made equally easily all the time in the market. They back off for a while if the market is too volatile or choppy.
source:rediff.com
I discuss below eight ways of undisciplined trading which lead to losses. Guard against them, or the market will wipe you out. I am qualified to speak on this subject because I was myself an undisciplined trader for a long time and the market hammered me into line and forced me to change my approach.
1. Trading during the first half-hour of the session
The first half-hour of the trading day is driven by emotion, affected by overnight movements in the global markets, and hangover of the previous day's trading. Also, this is the period used by the market to entice novice traders into taking a position which might be contrary to the real trend which emerges only later in the day.
Most experienced traders simply watch the markets for the first half of the day for intraday patterns and any subsequent trading breakouts.
2. Failing to hear the market's message
Personally, I try to hear the message of the markets and then try to confirm it with the charts. During the trading day, I like to watch if the market is able to hold certain levels or not.
I like to go long around the end of the day if supported by patterns, and if the prices are consistently holding on to higher levels. I like to go short if the market is giving up higher levels, unable to sustain them and the patterns support a down move of the market.
This technique is called tape watching and all full-time traders practice it in some shape or form. If the markets are choppy and oscillate within a small range, then the market's message is to keep out.
Hearing the message of the market can be particularly important in times of significant news. The market generally reacts in a fashion contrary to most peoples' expectation. Let us consider two recent Indian events of significance.
One was the Gujarat earthquake that took place on 26 January 2001 and the other the 13 December 2001 terrorist attack on the Indian parliament. Both these events appeared catastrophic at first glance. TV channels suggested that the earthquake would devastate the country's economy because Gujarat has the largest number of investors and their confidence would be shattered, making the stock market plunge.
Tragic as both the events were, the market reacted in a different way to each by the end of the day. In both cases the markets plunged around 170 points when it opened, in both cases it tried to recover and while it managed a full recovery in the case of the Gujarat earthquake, it could not do so in the Parliament attack case.
The market was proven correct on both counts. The Gujarat earthquake actually held the possibility of boosting the economy as reconstruction had to be taken up, and also because most of the big installations, including the Jamnagar Refinery, escaped damage. In the case of the attack on parliament, although traders assessed that terrorist attacks were nothing new in the country but the market did not recover because it could see some kind of military build-up ahead from both India and Pakistan. And markets hate war and uncertainty.
In both these cases what helped the cause of the traders were the charts. If the charts say that the market is acting in a certain way, go ahead and accept it. The market is right all the time. This is probably even truer than the more common wisdom about the customer being the king. If you can accept the market as king, you will end up as a very rich trader, indeed.
Herein lies one reason why people who think they are very educated and smart often get trashed by the market because this market doesn't care who you are and it's certainly not there to help you. So expect no mercy from it; in fact, think of it as something that is there to take away your money, unless you take steps to protect yourself.
3. Ignoring which phase the market is in
It is important to know what phase the market is in -- whether it's in a trending or a trading phase. In a trending phase, you go and buy/sell breakouts, but in a trading phase you buy weakness and sell strength.
Traders who do not understand the mood of the market often end up using the wrong indicators in the wrong market conditions. This is an area where humility comes in. Trading in the market is like blind man walking with the help of a stick.
You need to be extremely flexible in changing positions and in trying to develop a feel for the market. This feel is then backed by the various technical indicators in confirming the phase of the market. Undisciplined traders, driven by their ego, often ignore the phase the market is in.
4. Failing to reduce position size when warranted
Traders should be flexible in reducing their position size whenever the market is not giving clear signals. For example, if you take an average position of 3,000 shares in Nifty futures, you should be ready to reduce it to 1,000 shares.
This can happen either when trading counter trend or when the market is not displaying a strong trend. Your exposure to the market should depend on the market's mood at any given point in the market. You should book partial profits as soon as the trade starts earning two to three times the average risk taken.
5. Failing to treat every trade as just another trade
Undisciplined traders often think that a particular situation is sure to give profits and sometimes take risk several times their normal level. This can lead to a heavy drawdown as such situations often do not work out.
Every trade is just another trade and only normal profits should be expected every time. Supernormal profits are a bonus when they -- rarely! -- occur but should not be expected. The risk should not be increased unless your account equity grows enough to service that risk.
6. Over-eagerness in booking profits
Profits in any trading account are often skewed to only a few trades. Traders should not be over-eager to book profits so long the market is acting right. Most traders tend to book profits too early in order to enjoy the winning feeling, thereby letting go substantial trends even when they have got a good entry into the market.
If at all, profit booking should be done in stages, always keeping some position open to take advantage of the rest of the move. Remember trading should consist of small profits, small losses, and big profits. Big losses are what must be avoided. The purpose of trading should be to get a position substantially into money, and then maintain trailing stop losses to protect profits.
Most trading is breakeven trading. Accounts sizes and income from trading are enhanced only when you make eight to ten times your risk. If you can make this happens once a month or even once in two months, you would be fine. The important point here is to not get shaken by the daily noise of the market and to see the market through to its logical target.
Remember, most money is made not by brilliant entries but by sitting on profitable positions long enough. It's boring to do nothing once a position is taken but the maturity of a trader is known not by the number of trades he makes but the amount of time he sits on profitable trades and hence the quantum of profits that he generates.
7. Trading for emotional highs
Trading is an expensive place to get emotional excitement or to be treated as an adventure sport. Traders need to keep a high degree of emotional balance to trade successfully. If you are stressed because of some unrelated events, there is no need to add trading stress to it. Trading should be avoided in periods of high emotional stress.
8. Failing to realise that trading decisions are not about consensus building
Our training since childhood often hampers the behaviour necessary for successful trading. We are always taught that whenever we take a decision, we should consult a number of people, and then do what the majority thinks is right. The truth of this market is that it never does what the majority thinks it will do.
Trading is a loner's job. Traders should not talk to a lot of people during trading hours. They can talk to experienced traders after market hours but more on methodology than on what the other trader thinks about the market.
If a trader has to ask someone else about his trade then he should not be in it. Traders should constantly try to improve their trading skills and by trading skills I mean not only charting skills but also position sizing and money management skills. Successful traders recognise that money cannot be made equally easily all the time in the market. They back off for a while if the market is too volatile or choppy.
source:rediff.com
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