My take on the Indian Stock Markets - Sensex and N

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Think Again! Are you a Trader or an Investor?
2008-02-16 13:35:00
While following Stock tips, a common mistake an Investor tends to make is buy trading stocks that have a specific target and period in which it will be acheived. This is exactly what a trader does, so inspite of being an investor, you tend to buy into trading stocks. An Investor buys stocks and remains invested for a minimum period of a year, so you do not end up paying Capital gains on the profits.To understand a trader better, let me list down the types of Trading which are mainly differentiated by the timeframe involved. Swing Trading This is the method which allows trading of tradable swings, up and down. The length of time the trade is held could be from 3 to 4, days to a couple of weeks. Position Trading This is used by traders who tend to hold trades over multiple swings, not ending their trades on intermittent corrections. They could be holding trades anywhere from a couple of weeks to many months. Day Trading Day Traders trade within the course of a day. They generall...

Dow Jones Index has crucial support at 12000
2008-02-06 14:38:00
Over the past month, Global markets have been driven by the behaviour of Dow Jones and Nasdaq. Dow Jones has a very crucial support level at 12000 and it is currently trading very close to those levels. The next few sessions would be very crucial for Global markets as if this crucial support level is broken, going ahead, I would have a very bearish view. The last time, Dow touched 12000 was on 22nd January after which it rebounded quickly to higher levels. It was during that period, Asian markets also tumbled and Indian markets hit the lower circuit. Unfortunately, the FTSE index is very choppy and trading flat. Government data on fourth-quarter productivity is scheduled to arrive at 8:30 a.m. EST, and could calm economic jitters somewhat if results come in as expected. After yesterdays weak session, apparently investors are positive for a higher open as Disney results have beaten street expectations. Let's wait and watch for today's session which will give us all important cue...
More About: Support , Index

Following Global Markets, Nifty crosses 5400 - What strategy next?
2008-02-04 19:08:00
After last week, US markets put up their strongest performance of the past 5 years, all Asian indices were up and Indian markets followed on the Global cues. Both Nifty and Sensex managed to cross psychological resistance barriers of  5400 and 18500 respectively. The question now to ask ourselves is whether this was an opportunity to book some profits and unwind positions or do we expect the rally to continue further? Global Factor: The fact remains that we are still closely aligned with the global markets. As the FTSE index opened today, we could see the markets coming under pressure and coming off the days high. Inspite of the news that US factories report a rise in orders for December, US markets cashed in profits and are currently trading in negative. Union Budget uncertainities: With the Budget around the corner, investors would want to wait and trade cautiously, and till then also hope that the global picture improves. There were some statements which indicate the...
More About: Strategy , Markets , Crosses

Profit by leveraging the Nifty Futures and Options Setup - Secrets revealed
2008-02-03 09:00:00
In the recent stock market crash, we have seen so many traders loose all their money in Futures and Options . Like Udayan says, "Stock Future is not a toy but a time bomb in the hands of an expert". An expert Futures trader keeps looking for loopholes (price differences in the premium spread) to make quick money and does not get into naked positions, i.e. one can profit if the market swings either ways or atleast the losses are minimised. Today I shall share one such setup which is applicable to the current rangebound scenario. The NSE India website provides you with latest prices of all the contracts; the following link displays the prices of all the Nifty Options contract. I prefer to trade mostly on Nifty contracts as they are actively traded and even easy to get rid off. Link: NIFTY Options contracts Entering the Position The Underlying value of the February Nifty Options is 5315 and we still have 18 trading sessions before settlement. We have a view that the...
More About: Profit , Setup , Secrets

Nifty UP by 3.5%, February Series starts with a Bang
2008-02-02 11:47:00
Last week, a lot of news has been absorbed by the Indian markets, like the RBI anouncement, Fed rate cuts, results posted by companies but the new month has begun with a positive note, the Nifty closing 3.5% higher today. Analysing the current trends, volumes and behaviour of the markets, there are lot of interesting observations to make: Surprisingly, IT stocks which were non-performers for a long period lead the rally with CNX IT index up by 6.15%, Infosys was up by 6.37%. The results of IT companies have been average; Infosys net profits for the quarter ending December 2007 grew by 23.8%. When stocks of IT companies were on the rise, P/E ratio of this industry was around 35. I have never seen Infosys quoting a P/E below 25. In the past year, fundamentally good stocks like Infosys have been beaten such that now it is quoting at a modest P/E of 22. This sector currently possesses risks as it is highly dependent on the US economy and it deals with exports and maintenance of soft...
More About: Series , Bang , February

Fed does it again
2008-01-30 20:35:00
The Federal reserve cuts interest rates again by half a point. This should boost up the moral of the investors and we can definitely expect the markets to rally tomorrow. This should also be a signal for Dr. Reddy to again review the RBI interest rates as such a differential cannot co-exists! The Nifty has formed a resistance at 5400+ levels and if it manages to break those levels tomorrow, it might bring back the bulls in action. As I type this post, I can see the Dow and Nasdaq only heading northwards. One cannot ask for more from the Fed, a One and quarter points cut in about a couple of weeks duration.Fingers crossed with the budgets coming soom, I am bullish again on the Indian markets. What are your views? Please leave your comments.

Credit Policy impact on your Stocks
2008-01-29 18:25:00
The eagerly awaited outcome of Credit Policy review was out today and RBI Governor Dr. Y.V. Reddy has kept all the key rates unchanged. How does it affect you and your portfolio? To understand the Credit Policy better, let me list down the key rates and what they actually mean:Bank RateBank Rate is the rate at which banks borrow from RBI. A cut in the bank rate could mean a reduction in fixed-income instruments, for instance, it will lower the rates of Fixed Deposits. Reverse Repo and Repo RateThe reverse repo rate is the rate at which banks park their short-term excess liquidity with the RBI, while the repo rate is the rate at which the RBI pumps in short-term liquidity into the system. The repo rate has a direct bearing on the overnight or the call money market; this is the market where banks and primary dealers borrow money for one day to, typically, 14 days.CRR RateIndian banks are required to hold a certain proportion of their deposits as cash. In reality they don’t hold the...
More About: Stocks

Building your Stocks Portfolio - Part II
2008-01-28 15:22:00
Continuing from the previous post, let me take you through a practical example where a middle class investor has rupees 100,000 to invest. With a little reading and research on which sectors are performing well, supportive Government policies and seeing where our country is heading, I would identify the following sectors to be invested in: No Sector 1 Banking/Finance 2 Engineering/Capital Goods 3 Infrastructure/Construction Keeping in mind that the investor would want to liquidate the money in 2-3 years and is an average risk taker, I would atleast recommend 60% of the amount in Large caps which have been performing very well over the past years. Following would be my recommendation: Stock Name Amount to be invested Larsen & Toubro 30,000 HDFC 30,000 JP Associates 25,000 ...
More About: Building , Stocks , Portfolio , Part

Building your Stocks Portfolio - Part I
2008-01-27 13:41:00
  In simple terms, a portfolio consists of stocks one has invested in and it helps one track its progress and returns. The aim of every portfolio is to achieve maximum returns or atleast perform better than the Index. There are various factors which determine the risk of the portfolio but one key rule to remember is shorter the duration of investment, more riskier it gets. The foundation of a portfolio should be built on Blue-chip stocks which are fundamentally good stocks/sectors and one should remain invested in it atleast for a duration of 2-3 years. To start off, let me list down some key factors one should bear in mind while building ones portfolio:   Identifying Sectors It is very important to understand how companies in every sector operate and what global factors can impact its growth. Take the example of Infosys which is a company operating in the IT sector which until 2006, was one of India's top performing stocks. In the past couple of years, IT companies hav...
More About: Building , Stocks , Portfolio , Part

Asian markets rebound on Fed rate cut
2008-01-25 07:45:00
The Fed announcement has definitely come as a relief for all the investors. Today, Nifty closed above 5200, which is about 304 points up. Interest rate cuts in the United States makes emerging markets more attractive for Foreign investors. In the near term, it may try and address the crisis situation but it does not help the longer cause of inflation worries. Going ahead, we can see the rupee getting stronger against the dollar which is not very good for sectors which thrive on exports. The IT industry has already seen tough times and going ahead things aren’t going to get any better.But is the Indian economy really dependent on the US? One may really want to see the positive side of the story, which can be determined by the internal demand within the country. India as a nation is still growing in sectors like infrastructure, power, automation, agriculture, technology, telecom and we are far-away from other matured economies.Going ahead, these sectors definitely look attractive.A...
More About: Markets , Asian , Rate

Re-visit your Investment triangle
2008-01-25 07:45:00
After my post-graduation, I started my first job with a very modest salary. I hardly knew the art of investments and had to pay income taxes, later realised, it could have actually been my savings. I was told that insurance is a way to save taxes and that was where I made the first investment.Like me, very few youngsters at that age aren’t aware of the investment triangle and where to invest money idling in the bank. We are all aware of the modes of investments but don’t know which should be given preference and how much amount should one be investing in each of these instruments.Lets list down the important aspects one should be aware off before investing in any of these instruments:1) Liquidity2) Percentage of returns3) Purpose4) Cost of carry/maintenance5) Risk factorsDepending on the persons age and risk profile, investment triangle for every person would vary, so lets take an example of a person who is termed as a middle class investor. The following investment profile can ...
More About: Investment , Visit , Triangle

Fed Slashes Interest Rate 75 Basis Points
2008-01-22 20:46:00
This is just what the doctor ordered :) Weren't we all speculating for another crash for the hird consequetive session? Something un-natural cannot last for long whichever way it may swing. Well, but I guess most of the damage has already been done! In the short-term perspective, things don't look too bright anyways; one thing which we need to tell ourselves is there is no fast way of earning money! The Stock market crash aka Tsunami has made a lot of people poorer and will scare a lot of retail investors away from the market. This does not drive away the potentials which the equity market offers but just that people don't want to understand the fundamentals behind the whole thing.Going forward, I'm really excited about the prospect which the Indian markets would present and sure that this will bring about sanity in the Indian markets. This situation reminds me about year 2000 which was the DOT COM boom when every small venture wanted to float a DOT COM, but did each of them sus...
More About: Interest , Points , Rate , Interest Rate

Bad beginning - Markets plunge!
2008-01-21 08:50:00
As I write this post, seems market is going to hit the lower circuit and close!!The damage has already been done. Over the past weeks, (virtual) profits which were accumulated over months has just wiped out!!This was always expected and as a speculator you wonder whether the worst is over or there is more pain to come?Well, for an investor (long-term view, someone like me would not liquidate these positions for the next decade) this shouldn’t be worrying at all because the long-term growth story for India is still in-tact! It is definitely a cause of concern for short-term investments and traders; not to mention, even I have made substantial losses in derivatives and short-term positions. At this moment, markets look-like going either ways and would list down a few points which may help us to come to a conclusion (?):Bearish sentiments: 1) US Crisis seems to be worsening day-by-day and global cues are very negative.2) Panic amongst retail/institutional investors.3) Liquidity crun...
More About: Markets

Free-fall and corrections explained (for dummies)!!
2008-01-19 19:55:00
An Index consists of top companies from various sectors. The most regularly quoted market indexes are broad-base indexes comprised of the stocks of large companies listed on a nation's largest stock exchanges, such as the American Dow Jones Industrial Average and S&P 500 Index, the British FTSE 100, the French CAC 40, the German DAX, the Japanese Nikkei 225, the Indian Sensex and the Hong Kong Hang Seng Index. The movement of these Index stocks determines the Index value, which in-turn influences the sentiments of investors and traders.A Stock index of a country, in a way, reflects the growth story of a country. The returns Nifty has given in the past few years are as follows:Jan-Dec 2007: markets closed at 6,138 with returns of 54.76% for the yearJan-Dec 2006: markets closed at 3,966 with returns of 39.84% for the yearJan-Dec 2005: markets closed at 2,836 with returns of 36.34% for the yearJan-Dec 2004: markets closed at 2,080 with returns of 10.69% for the yearThe aim of every po...
More About: Dummies , Free , Corrections , Fall , Free Fall

Defying all expectations, Nifty dives to 5705.
2008-01-19 08:00:00
Just a few days ago what seemed to be a raging bull market, in a few sessions has given up all the gains, i.e. the dynamics of the Stock market. Now what is more interesting that one also expects the market to rise back with the same momentum. In all, if one was a good astrologer, there is millions to be made out of these sideways movements.For an investor, this is not good news because all his profits (virtual) which had been accumulated over months has disappeared in minutes. What we need to tell ourselves is that the bull market has raised peoples expectations and made them more greedy. We used to be satisfied with monet growing at a modest 10% per annum but these days we want it to grow atleast by 20%! So even with all these wild swings, the stock market has always delivered more than 20%, even if you are just invested in the Index, so really why should we be that disappointed? Smartly, I sold off Sterlite and re-invested the same money in RNRL. Not that I believe in the growth ...
More About: Nifty , Expectations

Hang Seng and Nikkei rebound to the GREEN.
2008-01-18 09:14:00
Do you think Indian markets can remain in the RED when other indices have smartly rebounded to close in positive territory? I'm very positive that NIFTY will close in positive today. I'm expecting a smart re-bound from these levels. Traders are cautiously watching the opening of FTSE. As I write this blog, FTSE opens about half a percent in red, but shouldn't be worrying us!
More About: Green , Hang , Nikkei , Hang Seng

Trying a pull-back act...but resistance at 5900+
2008-01-18 08:34:00
The Nifty did try a smart recovery but had to again loose out on the momentum; the Asian markets have seemed to have recovered some ground. The Nikkei has actually closed in the GREEN. I have decided to sell of Sterlite and pick up RANBAXY. As I placed an order at 372, on the next refresh it was about 3% UP and now trading at 382! I have an option for it to correct a little or just go with the momentum, a tough situation when you are really looking for a short term gain! RANBAXY is quite a fundamentally strong share and one should ideally go long on it. I still remember my grandmother showing me her RANBAXY share certificates :)Today is the day to pick up SUZLON as from Monday it will be trading with a face value of Re. 2/- Well, one can be certain this counter will not close in negative today, so an interesting setup stock for the short-term.
More About: Back , Resistance , Pull

Nifty sheds all gains to close at 5913.
2008-01-17 18:37:00
This was the most expensive coffee I've ever had. At around 2:00 PM, the Nifty was above 6000 which was about a percent high. Profit booking on the peaks continued for the third consecutive day! Unfortunately even the Q3 results of Reliance could not cheer the markets. Infact Reliance closed about 3% in the red. I am happy with the move L&T has had today. Currently my trading positions look like below:* Jan Nifty Futures 100@5922* Reliance Options Strike 3050@90.50* HDFC Options Strike 3000@70.00* L&T Options Strike 4000@150.00In the cash segment, I've picked up Sterlite abd Appolo tyres. The exit from Sterlite should be after about 5-10 percent run up. We can go a bit longer with Appolo tyres.I'm still bullish and waiting for a pull back to about 6050 with Reliance, HDFC and L&T leading the pack!! That would be the icing on the cake :)Unfortunately looking ahead tomorrow, the global situation doesn't seemed to have improved much; Europe is more than half a percent down and US m...
More About: Close