Saturday, February 19, 2011

Upcoming Budget 2011

Upcoming Budget 2011 is very critical for market trend. There is lot of hope and dependencies on Budget news.
So lets have some strategy to pick few call for Budget. I mean stocks which are expected to give return base on positive news from Budget. For example i personally feel every year Budget news are positive for Agriculture sector and stocks related to that sector gives good return.
Can we analyze on Basanth Agro, RCF, Nagarjuna Fertilizer etc or anyother stocks also welcome ?

Wednesday, February 16, 2011

Nifty - Technical pullback

Nifty is finding resistance @ 5500 levels which was earlier a key support level. I believe the current technical pullback from 5173 level is losing steam now. It may on the upper side, reach 5550 levels which is the next resistance level if Nifty manages to close above 5500.

Any subsequent movement would be determined by the budget followed by the big movement during the results season.

Monday, February 14, 2011

Sensex up 473 points

Today sensex up by 473 points rises most in 4 months. The pull back is expected due to over sold and can hold still budget.Global cue was also suppotive after Mubarak's exit.

Wednesday, February 9, 2011

Butterfly strategy options

Hi Guys,
Definition of Butterfly strategy option:
A butterfly strategy is used to minimize risk, non- directional optional strategy designed to have a large probability of earning small limited profit when the future volatility of the underlying is expected to be different from implied volatility.

I have heard this but never tried it and i am also not much familiar with this concept but love to know more about it.
So it would be great if anyone of us had already tried this strategy or know more details can share it with all,


Sunday, February 6, 2011

Sneak peak into Mid-Cap stocks that are below Book Value - Part 2 (of 3)

6. HPCL:
Face Value: Rs.10
Book Value: Rs.358
Current Price: Rs.340.75
Year High: Rs.555.70 (Sep 6 2010); Year Low: 292 (Apr 29 2010)
It is currently 4.8% below its book value; 38.68% below its year high and 14.31%  above its year low. This is part of Nifty Junior Index and is a good dividend paying stock. It last paid Rs.12 as dividend (03-Sep-2010). This stock may have support  at Rs.332.3. If this is broken, it may test its year low or find support at year low - Rs. 292. Given the expectation that Oil prices are bound to go further up from the current $90 levels to $120 levels., this stock will have good upside potential. However considering its current price position, it may be prudent to rather wait to see a better opportunity to enter.

7. HDFC:
Face Value: Rs.2
Book Value: Rs.631.9
Current Price: Rs.604.15
Year High: Rs.860.8 (After split) (Oct 11 2010) ; Year Low: Rs.465 (Feb 8 2010)
This stock was split last year in the ratio of 10:2. So, not sure about the accuracy of the book value. It is currently 4.8% below its quoted book value; 29.8% below its year high and 23% above its year end low. I could not arrive at a view for this stock.

8. Edelweiss Capital:
Face Value: Rs.1
Book Value: Rs.300.7
Current Price: Rs.37.5
Year High: Rs.68.2 (After split) (Oct 28 2010); Year Low: Rs.36.85 (Feb 4 2011)
This stock was split last year in the ratio of 5:1. So, not sure about the accuracy of the book value as it is quoted at a huge difference. It is currently 87.53% below its book value; 45.01% below its year high and it has just formed a new year low on friday (Feb 4 2011). It has been quite volatile in the recent period. In 3 months period, it has reached from its year high to year low, which is almost 46% down. Would need to review its fundamentals further before taking a decision on this stock.

9. Kalpataru Power:
Face Value: Rs.2.
Book Value: Rs.387.4
Current Price: Rs.131.2
Year High: Rs. 225 (After split) (Apr 22, 2010); Year Low: Rs.130 (Jan 31 2011)
This stock also was split last september in the ratio of 10:2. So, not sure about the accuracy of the book value as it is quoted at a huge difference. It is currently 66.13% below book value; 41.6% below year high and just about 1 % above year low. Its volume is very low and this stock is not in the F&O segment. Though power stocks are generally good in the long term, may be, there are better bets in the market. Would need to review its fundamentals further before taking a decision on this stock.

10: Kirloskar Industries:
Face Value: Rs.10
Book Value: Rs.493.
Current Price: 364.1
Year High: Rs.879 ; Year Low: Rs.240 (Jun 24 2010)
This stock has reached its year high and low on the same day (on Jun 24 2010). Some unusual movement on that day. It is currently priced at 26.15% below its book value; 58.58% below its year high and 34.08% above its year low. The volume is very very low (just 3 digits). I would look out for better opportunities in other stocks with better liquidity.

Part 3 to follow shortly...

Sneak peak into Mid-Cap stocks that are below Book Value - Part 1 (of 3)

Yesterday, I had posted an article that was primarily from Economic times. This is in relation to that article. In an effort to break down further and for everyone's benefit, I have reviewed each of the stocks listed in that article as being below book value. I have split into 3 parts and here is part 1.

1. TATA Global: 
Face Value is Rs.1.
Book Value is Rs.596.4. 
Current Price Rs. 95.3
This is formerly called Tata Tea. Its current full name is TATA Global Beverages Ltd. This stock was split in the ratio 10:1 last year. Prior to its stock split, its year high was 1218. So, not sure, if the stock split is factored in the book value quoted above. As per the last financial report, this company has reported net profit and with an increase in sales when compared with previous quarter. So, not sure if there is any real reason for the current price of the stock to be 84% below its book value. After the split, the year high is Rs.138 and year low is Rs.94.2. It is currently trading @ 30.94% below its year high and just 1.1% above  its  year low. Im not able to conclude on a view except for the fact that this being a TATA group stock., the group I have high respect!

2. Videocon Inds:
Face Value is Rs.10.
Book Value is Rs. 315.7
Current Price is Rs. 204.5
Year High: 295 (Oct 6 2010); Year Low: 185 (Jun 8 2010)
It is currently at 35.37% below its book value; 30.83% below its year high; 9.34% above its year low.
Its volume is quite low. 27% is held by the public and the rest by the promoters / promoter group. Given the current trend, I presume, the price might fall to 185-190 levels.

3. Reliance Communications:
Face Value: Rs.5
Book Value: Rs.210.10
Current  Price: Rs.114.75
Year High: 207.8 (Jun 28 2010); Year Low: 114.05 (Feb 4 2011)
This is part of the Nifty Index and ADAG Group. Its current price is 45.38% below Book Value; 44.78% below Year High and has just formed a new year low of 114.05 on Friday. (Feb 4). Given the current price and potential of telecom sector in the long run, one can take some position at current levels or wait for the stock to form a new bottom. In any case, entering the stock at current levels with a long term view would not be a bad idea.

4. GE Shipping:
Face Value: Rs.10
Book Value: Rs. 374.4
Current Price: Rs. 293.8
Year High: 392.9 (Nov 10 2010); Year Low: 258.4 (Mar 2010)
Its current price is 21.53% below Book Value; 25.22% below year high and 12.07% above year low. Given the current trend, this might find support near its year low of 258-260 levels.

5. IVRCL Infra:
Face Value: Rs.2
Book Value: Rs. 100.2
Current Price: Rs. 74.05
Year High: 194.5 (Jul 12 2010); Year Low: 73.65 (Feb 4 2011)
The stock was split in the ratio 2:1 last year. Not sure if the book value reflects the stock split. Its current price is 26.10% below Book Value; 61.93% below year high and formed a new year low of 73.65 on friday (Feb 4). This stock is in very strong downtrend. Its recent high was Rs.135.8 on Jan 4 2011. Since then (in roughly 20 trading sessions/days), it has fallen by almost 46% and with increasing volume as well. So, this stock is now definitely beaten down by the market. This stock is part of the Nifty Midcap50 Index. Considering the potential of this sector, with a long term view, one can take position in this stock and enhance position if it goes further down significantly (by more than 20% further) or enhance position when the trend reverses and price moves upside.

Part 2 & 3 follows shortly...

Saturday, February 5, 2011

Tourism Finance - Technical View

As requested by Kuldeep, providing the technical view of this stock.

Face value Rs.10
04-Feb - Close -> Rs.28.60
Year High is 43.25 and Year Low is 25.00

In the Japanese candlestick chart, it has formed a double top around Rs.41-42. (First top on Nov 11 2010 and second top on Dec 1 2010). The stock is obviously in down trend now, as it is hovering near its year end low. Support levels on the downside is Rs.26.70 and Rs.25.50. Breaking these levels may see the stock going further down.

As per the Fibo, 38.2% retracement from the current downside journey would be Rs.33.8. So, any upside movement in the near term will face resistance at this level.

As per the Moving Averages, Short term trend will be considered up if the price closes above 31 and stays for at least 3 days. On the up side, it faces resistance at 34 and 35 (200D MA) levels. Above this, the intermediate to long term trend would be considered up.

As per the RSI, the stock is in over-sold zone, but not extremely over-sold. 50 Days Average volume of this stock is less than 100,000 shares per day, which is quite low for its value.

Short-term Trade Setup/Plan:
If the price finds support at 25-26 levels, (need to be confirmed by price not breaking this level and closing above it), one can buy with a target of Rs.33 (38.2% Fibo retracement is Rs.33.8).

Intermediate to Long Term Plan:
One can take small position when the price closes above Rs.31 and enhance position when it goes above Rs.35.

Several mid-cap stocks fall below their book value

In the current market condition, one should not have to panic at the market movement. What one needs to realize is that, it creates a lot of opportunities. The real challenge is to identify the opportunities and utilize it to one's benefit. This is the time not to be worried about past losses or about the falling prices. This is the time to keep a cool head. The message needs to be loud and clear -- "Dont get bogged down by the market movement and watch out for opportunities". Look out for value stocks and there are a lot of opportunities now. On these lines, I came across this article in TimesofIndia and found this to be very interesting and useful. Here is the excerpts of that article:

The recent correction in shares may have set the stage for value-hunters to pick and choose ‘multi-baggers’ — a market terminology for describing stocks that could grow many-folds in value. Several mid-cap and select front-line stocks have fallen below their book value, a conventional valuation metric, after the 13-15% fall in the BSE’s mid-cap and small-cap indices from their highs in the past two months.

An ET analysis shows around 20 ‘A’ group and over 850 ‘B’ group companies — nearly 43% of overall mid-cap universe — are currently trading below the net asset value or book value. Book value means the value of company’s total assets (with goodwill) less liabilities.

“This is an opportunity for investors to buy some good stocks,” said Ambareesh Baliga, vice-president, Karvy Stock Broking. “Fundamentals usually take the back seat in an indecisive market like this. Speculators dump good stocks at any price in such conditions. Several stocks in the mid-cap segment could be buys at current price levels,” he said.

Some shares of companies could have fallen below book value because of bleak business outlook rather than a selloff led by poor investor sentiment, Baliga warns. Analysts said investors may buy shares of banks, consumer goods, agri-based companies and logistic companies that are trading below their book value, analysts said.

They are also sceptical about the prospects of large-cap index stocks that are currently trading below book value, as these stocks are weighed down mostly when business outlook is negative.

Analysts are cautious about the prospects of some big companies whose shares are trading below their book value — Aditya Birla Nuvo is currently trading Rs 1,275 per share lower than book value, HDIL (Rs 63), Sterlite Industries (Rs 272), Indiabulls Real Estate (Rs 116), LIC Housing Finance (Rs 190), MTNL (Rs 103), Reliance Infra (Rs 107).

Analysts said most companies trading below book value may have issues relating to business scale and uncertainty over profit growth in the future. Some companies value their assets at prices higher than market value, resulting in higher price to book value and lower stock price.

Price to book value is a metric to value stocks of companies which have large amount of tangible assets in their balance sheet. As per textbooks, if a company is trading at a price to book value of less than 1, the company’s assets are either overvalued or it is earning poor return on its assets.

“PBV less than 1 is definitely a good buy, but then it should be taken on a case to case basis. It should not be the lone criteria to buy a stock,” said Saurabh Agarwal, director, Kennis Group, a Mumbai-based investment consultancy, adding, “Stocks with low market float also tend to trade below book value.”

In other instances, companies with lower corporate governance may have lot of cash — the benefit of which will only be going to promoters. This cash component will not reflect in stock price. Book value is an ideal metric in case of companies that are in investment phase as it can estimate potential earnings of a company for several quarters ahead, analysts said.

Thursday, February 3, 2011

Market Today - 03-Feb-11

As expected, Market has moved up today and closed above the critical mark of 5500. It is to be seen if today's pull back is just a knee jerk reaction of the market before it continues its downside further or if yesterday's low is a temporary bottom before the Feb budget rally. I believe there is no reason for the market to go down further from here unless there are very bad news in the offing.

Irrespective of the market move from here, it is to be noted that, current levels is a good entry for a lot of stocks with a long term view. It is obvious that no one can predict the market's bottom. So, I believe, entering the market now or accumulating one's position with a long term view would not go wrong. (Even if there is further dip in the market in the near term).

Others' views opinions are much appreciated...