SAILING IN TURBULENT STOCK MARKET

The drama of free fall of Indian stock market staged in this week was not entirely unexpected. We could smell the storm. My last few blogs (here, here and here) actually dwelled on the impending danger. It does not require much intelligence to see the dark cloud in the horizon. (I felt like "Faberish" while typing out my last few blogs.) I was expected to book profit but there was hardly any profit to book. So I left my investments as such.

 

One can see few silver linings on the dark clouds too.

 

The market correction in the matured markets is justified; the earning of them is already saturated. But for Indian stock market, there is still a long way to go before to be saturated enough to crystallize out. The forward earning potential is still justified for the companies barring a few. The global credit situation if you analyze should not affect the Indian stock market. The initial jolt on our stock market by the global phenomena will be a temporary phase.

 

It is time to pick a few cherries in the bargain. We never know where the bottom is. The so called technical analyses are mostly fluke and few exceptions prove the rule. One should wait to exhaust his money to see the market pick up again. But in a bull market like Indian stock market, the price you pay for any stock will be surpassed after some time, if the fundamentals of the stock are good. One should see the fundamental first.

 

After every correction and especially after a tank like this the market generally reorganizes itself. There will be switch of sector, try to gauge the value sectors. May be banking, may be IT or may be anything which remained in the dark eclipse few weeks back. To me the last run of few sectors beyond calculations are not going to be there anymore.

 

The YoYo of the index will be there, one should not care to book profit if the chance presents itself. In this kind of market the swing traders fares best. Do not panic for the index movement, panic if your stock goes down despite with good fundamentals. Exit immediately from it, if necessary book loss.

 

The market probably may go down a few notches in coming days. If you have some investment there, languishing, concentrate on something else. The next cricket match is a good idea. 

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SPARKS IN THE BANKING STOCKS

It was suggested by market Pundits that Bank stock will be subdued after some major policy changes all over the world. But Indian investors and traders are prudent enough to rubbish those suggestions and reconfirmed their interest in them. It seems the growth of Indian banking sector will be highest amidst global uncertainties.

 

Private Banks especially the better ones showed some good runs in the recent past. Bank of Rajasthan, Yes Bank, DCB and even sleepy Centurion Bank of Punjab were all sparkling for different reasons. But probably traders are also betting on proposed decontrol of banking scenario in near future. The private Banks will be the target of bigger International Banks for acquisition. Most of the private Banks are still attractively priced and there are still plenty of spaces to grow, for them. ICICI Bank is already holding its own forte.

 

The present star among the subdued Public sector Banks (PSB) is State Bank of India. The Bank is planning to grow unlike its peers. So it is attracting the attention of investors. The stock has already seen a run and is poising to run further. The news of stock split and the plan to raise capital to keep up with the expansion needs are already there. Also the news that State Bank of India is to mop up close to INR 6000 crores through equity offering which will dilute the holding of the government to 55% from present 59.73%. All these developments are poising to increase share holders value further.

 

I am no so sure about other PSBs.

 

We are in a growing market and the outlook of a growing market will be different to other matured markets. Why Pundits can not see it?

 

Small investors may accumulate some of the above; they should give returns beyond our expectations.

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BELIEVE IN INDIA STORY

I believe in "Shining India" story,

because..........

INDIA a nation of youth

INDIA a growing economy

INDIA have political parties which are above segment-politics

INDIA is growing by snubbing small divisive forces

We are in midst of a fantastic Bull Run of our capital market and we are lucky to be there.

There may be some turbulence at times but we are in winning side.

MERA BHARAT MAHAN

EMOTION AND ECONOMICS

The Indian stock market is swinging like a Yo-Yo. The market is trying to find its groove but so far has not been able to do so. World market cues are also baffling. The question of liquidity due to recent policy changes is a major laggard in stock market.

But is the situation should not be so bad in Indian market. Indian stock market is going up despite some small hick-ups here and there if we consider in a long term perspective. The market index is in overall Bullish trend.



The basic tenets of stock market say: the market depend on emotion of traders. When greed overcomes fear it is a bull run. But now it seems fear is overcoming the greed. Should we be prepared to have a bearish phase of our market?

The Sensex and Nifty movement yesterday and gap down opening today illustrates the fear. Some development in Europe, which may not have much bearing in our market has resulted in a solid tanking of our market. The fear is back.

Small investors are to exercise extreme caution at this point. Bearish phase historically never benefited small investors. It is too complex to make profit from a bear market for a small investor.

Book profit
Keep some money in your pocket

may be the slogans for the next week.

BIG BROTHERS ARE WATCHING

Hacks of activities were there in our stock market for the last few weeks. Sensex and Nifty swinging like a faulty pendulum. The greatest effect was US mortgage crisis which resulted in a meltdown of 600 Sensex points. RBI revised monetary policy and increased CRR from 6.5 to 7 percent. Inflation fell to 4.36 percent. US subprime worries heightened.  Crude price is going up. And what is not happening?

 

All these made a serious concoction which made everybody heady, prompting some mistakes from small investors. We sold our holdings as if to save the world from the falling sky. On panic we looked for clues from other (world) markets, though we are insulated from many vagaries other markets are facing. Watch the World market , even bears will wear caps with horn today. The Raging Bulls will stampade.

 

But what about our big brothers FIIs are doing during the period? They quietly picked up stocks worth Rs. 675 crores between July 27^th and August 1^st, according to report. They picked up stocks after Sensex fell to abyss on those days.

 

The India Shining story is very much intact, it is a long term story and very credible. The story is inviting small investors to invest in Indian Capital Market.

 

The infrastructure sector needs a critical look-in and maybe some stocks there are still left as undervalued. FIIs are heavily invested in that sector, recent inclusion and increase in holdings are Ansal Properties, GVK Power  and IDFC.

 

(It is always good to see the known stocks going up, outstanding among them is Cummins India, the stock is touching INR 400.) 

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SMALL WONDER

It was a market yo-yo for last few days. We, small investors are not only baffled but also puzzled what will be market tomorrow or days to come.

Some stocks are standing apart from the pack despite the ongoing on slaughter of the market.

Two stocks are coming to my mind where probably investors are betting in the present rainy days. one is State Bank of India and the other is Crompton and Greaves. Both the stocks are showing their robustness and going up in slow and steady pace.

One can see the movement and the pattern for last few days. Also it can be noted that for every sharp increase of price is supported by volume too.

The growth of SBI is phenomenal considering it to be a large cap stock, good result and news is prompting investors to get interested in it. SBI to me a long term story. It was heartening to see the investors faith in it and its movement in today's forgettable market.

Still I maintain that in any slide of market, the market reign supreme. It does distinguish between good stock and bad stocks in that condition. Small investors should invest in small quantum of their money.


YO YO movement in most cases (if you consider market history) result in long term lowering of market index, so it may not be healthy to enter market with a very long term perspective.

PREDICTING SENSEX-II

We know nobody can predict sensex /nifty for sure, at best one can only guess.

 

This month end many traders are poorer and wiser to respect the market force. The force was there and was visible to everybody. Till now no emerging market can ignore North American consumers and the policies framed there.

The small investors utilized the correction on Friday and bought some stocks at lower rate.

 

But the savage market correction yesterday put some shiver down the spine of us. Market can be so ruthless!!

Now nobody is sure if the market reached bottom. Every pundits with their "Market Patrika"s in hand are confused and contradicting himself in every next sentences.

What about the "stock specific formula" the pundits advocated, may be worth a trying now. But doubts are in mind does a market slide down spares the "good stocks". Probably not, yesterday was a eye opener. But still good stocks are better bet than others.

 

The most discussed among the lot is Reliance Industries; it has the potential to see new highs at every rally. (My target is INR 2000 plus)

The second one right now is Reliance Energy, it is a different story after the Sesan episode. (My target is about INR 900)

The present star among engineering companies are L&T and BHEL, steam are still there. (My short term target is 20% up form the present level)

Can one ignore Educomp Solutions? The stock is going up with recent news. (My target is INR 2900 in medium term.)

 

Forget the IT and Bank stocks for the time being. (Infosys, SBI, ICICI etc are excluded)

 

These stocks are worth picking up in the present correction.

 

Volatility will be there in the market in coming days but we are in the midst of a very good Bull Run of an Emerging market. Theoretically one should avail the opportunity of this kind of corrections.

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PREDICTING SENSEX

Can anyone predict future? If someone can do so, it will be an easy life for him. He can take appropriate steps in time and avoid pitfalls. If he is philanthropic he can take steps to avoid major world crisis and make the planet most peaceful to live. In due course of time, he will be the leader of humankind and will be no less to God. Can we imagine God as a trader? But alas, no one can predict anything ahead of time, and probably that is the reason our life is so exciting.

But one can sense that some thing is brewing and is most likely to happen. Name it sixth sense or good judgment or approbation of incidents. It does not need great intelligence to predict a rush-drunken driver to meet with some accident, a beautiful intelligent girl to ditch her dumb and poor boy friend. It does not need any dose of intelligence to forecast that tomorrow the human population in India will be more by half a million. To predict that during Market-crash the small investors will suffer most. These all predictions are mainly based on statistics and our pre-designed prejudices. But these predictions may not always hold good. If the drunken driver stops his car, locks it and takes a taxi to his destination he will avoid accident. Similarly, the boy sees the light and ditches the girl before the girl ditches him. Population growth is in the hand of government, any strict law of abstinence will stop it overnight.

What about small investor? It is an enigmatic repetition. Always the greed overcomes the sense of small investor. And the build up frenzy of Bull Run becomes a snowball which simply grabs him and pulls him into a deep ditch. It is not that he cannot see the market is balancing on thin ice, but still he will wear his skating shoe for a dance and he will regret for a long time to come. It is always easy to advice but difficult to practice.

What about big investors or market operators, they hedge their position and minimizes their loss in this kind of situations. They have enough resources to see well ahead of time what is going to happen in other words they always have the correct information.

But who could forecast the household spending power of North Americans has so much bearing on our market, which is not even a major consumer-good producer.

Was it a kind of pretext to pull the market into red?

Lets not be so “Faberish”, or Doom-sayer.

The present correction is presenting the small investor a great chance to revise his position and invest some more spare money. Pundits say that sound basic makes a stock strong candidate for investment. It is the time to forget short term trading for the time being. I believe the India Shining story very creditable and stock market is the platform to make fortune.

But I should be cautious, to what level the market will correct is most difficult to guess. I should actually see or can feel it. Because by that time; I will be pacified, devoid of any excitement of this Bull Run. I can even buy stocks in small batches, less than 25% of my buying capital at one time. Some good stocks are there which merits the attention of small investors at any time and remained expensive in Bull Run.

Reliance Industries: great pick if price is lowered by another two hundred
BHEL: yet to realize potential with good order book, difficult for valuation.
L & T: long term story, but should we pick below two thousand?
SBI: PSU, with its own limitation. INR 1400 should be OK.
HDFC: fantastic and consistent run, may need revaluation in your portfolio.

Correction are welcome for any bull run, it brings the traders to earth and makes them humble.

A humble person can always judge better.


NB: I am suffering from tech phobia, a slight here and there in the dash board, the look of my blog got changed and the links got missed, which I did not wanted to. I am sorry and I will correct it soon. It happened when my blog picked up momentum with increasing number of readers.

SMELLING SENSEX

We are in midst of a fantastic rally of our capital market. Both the market indices "Sensex" and "Nifty" are designed beautifully so that they depict the economic progression of our industries.  In other words, these indices actually give a picture of the economic progression of our country.

 

Economic progression is generally a synergic effort. No single sector can go ahead of others by miles. In the process it will drag other sectors along with it.  Or we can say the other sectors are pushing one sector up.

 

It is some what odd that the present run (from around 13000) is actually participated by only a few stocks (5-7 stocks, out of 30 of Sensex). The remaining stocks are sitting in the sideline. The recent good result of many other stocks failed to cheer the market in their favor. Forget about erstwhile leaders of the market like IT stocks, HLL, Hero-Honda etc. they are not only underperformer, they are being dumped.

 

One can smell a rat there, and question about the type of money coming to the market at recent times. Some are very new, not so reputed and entered our market through participatory notes mechanism. (I am told this participatory notes mechanism has some flows in it.) Is that kind of money jacking up those particular 5-6 stocks? Small investors beware; those fast moving stocks may look attractive but have some hidden dangers in them.

 

Like all small investors, who do not have access to genuine news at appropriate time, I am also expecting the market will reach 18000 or even 20000 by the year end. Probably the market operators are successful to build up frenzy in us, the small investors. The small investors in most cases, loses their hard earned money in any market manipulation.

 

Market, during Bull Run rarely follows the trickle-down theory, it is seen from history, it rewards the already rich and robs the poor.

 

Sometime it is better to be 'pessimistic',

......................................................or should I say 'pragmatic'.

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ABOUT CHOICES

It might be interesting to note that a stock does not know who owns it and does not care also. Only the owner is aware that a particular stock is in his portfolio. The investors take pride in owning a particular stock that he chooses and proud to have the stock even after all the good thing of the stock is long gone. I have seen so many people owning stocks of little value in present context, but the owner chooses to ignore the fact completely. It is about making choices, so to owning a particular stock. We have the wide open choices of stocks and other investment avenues before us and we can choose the best fit according to our choice.

The performance of a particular portfolio can not be excellent from the very first go. The probability of having an excellent portfolio is always very low. It is also observed that only a small percentage of investors/trader is able to beat the market by a good margin. Even a nominal good performance of our portfolio will lead us to wealth.

To reach the desired destination the small investor should be aware fully open to make changes to his position with time. Now, how to keep a portfolio, many stock pundits have different theories and one theory is diagonically opposite to any other in practice but inherent aim is same, making money. It is easy to get confused and get lost in the maze of stock market theories and start practicing them in parts. We should not forget the basic tenets of the very reason of being in the stock market

i.e. MAKING MONEY.

Recently few large cap stocks are standing apart from rest of the flocks (my previous blog), worth mentioning are

L&T
Reliance Industries
BHARTI AIRTEL
SBI
ICICI Bank

May be awareful change of position is in card.

STRONG AND STRONGER

The opening of market today is very strong and heady, apparently seems to be full of promise. For small investors it is not the time to jump into the frey and fight it out. In stock market parlance there are few words which are ominously true at times. The word come into my mind right now is "Black Friday", many a corrections and slides starts on fridays. Calculated steps are required to stop erosion of capital.

 

But who knows, may be another healthy run like yesterday is in offings. Lots of stocks seems to be attractive right now, every stock seems to be flying high in colours. Last time somebody said "During tide even the deadwood also come to shore."

 

I am persevering in HCL Tech but sold off IDBI, though I had to absorb some loss, but I must keep my smile intact.

 

I have some stock in my mind for today, lets see them in action today

 

Gatewaty Distipark

Idea Cellular

Reliance

Tech Mahindra

 

It sometime fun to see action from gallery, but who wants to miss the real action in the ring.

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BIG OPERATORS VIS-À-VIS SMALL INVESTORS

Though the term “Operator” does not seem right for all high net worth investors or institutional investors, the term somehow stuck to them. They have the capacity to manipulate the market. They can artificially jack a stock up or dump it down the drain and that is for anybody’s guess. If they choose to operate in cartel they can manipulate the whole market. We have the terms Bear Cartel and Bull Operator in capital markets.

The recent additions to the term “Operator” are Foreign Institutional Investors (FIIs) and Hedge Funds. When they come; they come in swarms and when they go, go out in swarms. These dangerous/vicious Operators can even ruin the economy of a country if the regulators are not careful enough. The established cartels and regular Operator treat them in awe. They have enormous money power and very well designed market operation employing best brains, which can upset any apple cart. There are lots of stories floating around in market, how so and so were really upset and had to gulp down some bitter pills against their very will. At times; it seems to be some kind of poetic justice meted out for some unjust operations affecting the Really Small and Helpless Investors (RSHI) that was carried out some years/months/days earlier.

The small investors are helpless spectators of the drama. The intelligent ones utilize the tide and reap the benefits. But most jumps into the arena a bit late and sadly have to converts their trade into investment with some real long horizon (*). My policy is to be the spectator and not try to be intelligent. I will invest only after studying the script and invest in them if the script can satisfy my basic requirements of sound fundamentals and low P/E and good earnings. (Change of strategy!!)

Cummins India is coming back to news as some Broker house has put it into buy; probably now it is making good chart patterns. I still have the opinion that the script has potential to go further up and may touch new highs, though I had come out of it as I did not had enough space for profit booking. It is still buy in correction.(*)

The TCS result has put some interest back into IT space. The IT picture seems to be gloomy in near term, but Indian IT Companies have the dominance and enough fire power to pull their act together again. I had a long night on Sunday, and decided to stay put in HCL Technology at least till result. My gut feeling says it will break the resistance of INR 350 in near term, I repeat that is gut feeling only.

I have two stocks in mind which may offer some short/medium term trading opportunity.

Centurion Bank of Punjab: Sometime unreasonable P/E defies justification if good stories are anticipated.

JBF Industries: May be another story of pulling the act together.

Both stories are touch and go. Careful study will be required.

LONG NIGHT TONIGHT

I was busy friday and could not track the market, it was a fantastic rally. Am I missing the rally? Probably I am in wrong sectors.

Probably I have the mentality of defending my decisions I took earlier (HCLTech abd IDFC). IT and Auto sector is not taking part in the rally. Am I hoping against hope that IT story is too near term.

I will rethink and realign my strategy so that I can make most of the opportunity.

But where the market is going? Should I take a long position or a short. How can I defend against capital loss?

May be a long night tonight. But I should come to a conclusion tonight, and scuffle my position on monday.

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INTROSPECTION ON INFOSYS RESULT

Ultimately the tension is over, Infosys result is out. though the result is not bad enough, but the concern is about the guidance for the next quarter. The guidance is based on the present rupee valuation and any appreciation of rupee may hamper its earnings. Many market observers are really upset by it and the stock reacted by going down by almost 4% at 2:15 PM today and pulled the entire IT pack with it. The major downward puller of Sensex today is Infosys.

Infosys management squarely put the blame on appreciating rupee and came out as: “This is an extraordinary quarter as the rupee moved by 7%. We assumed a guidance of 43.10 earlier, now the rupee average for the first quarter is 46.6. We have lost around Rs 287 crore in revenues for the first quarter. For the whole year, from the guidance we would have lost around Rs 1,000 crore. So, it has been an extraordinary quarter and that’s why we have revised the rupee guidance for the full year” V Balakrishnan, Chief Financial Officer, Infosys .

Market is certainly not happy with the explanation, and probably trying to put the money in different sector where more than 20% growth is possible in the next quarter. Pundits are not writing the stock off, and have enough confidence in it, as it was exhibited in past. JP Sinha of Ambit said "The fundamentals are still intact and the entire fall is led by the rupee, which has appreciated by almost 6.5%. I am not willing to write it off and it is a good time to buy."

Now it is introspection time for small investors. To put more money or come out of the IT pack I consider there are still many milestones to achieve by the Indian IT Industry. To identify I started to look at the earning estimated put up by Broker Houses for my stock HCL Technology . The findings are below from indiaearnings.com

ABN AMRO : net profit is seen down 11.2% at Rs 267.5 crore (Rs 2675 million), QoQ. During the same quarters its revenues are seen up 0.9% at Rs 1590.8 crore (Rs 15908 million).

M Oswal :net profit is seen up 1.4% at Rs 336.5 crore (Rs 3365 million) YoY. During the same quarters its net sales are seen up 2.2% at Rs 1611.2 crore (Rs 16112 million) in the corresponding quarter previous year

JP Morgan: net profit is seen up11.3% at Rs 347.4crore (Rs 3474million), QoQ. During the same quarter its net sales are seen up 0.9% at Rs 1590.8crore (Rs 15908million) QoQ. net profit is seen up 24.9% at Rs 376.1 crore (Rs 3761 million) versus Rs 301.2 crore (Rs 3,012 million) QoQ. During the same quarters its revenues are seen up 2.2% at Rs 1611.3 crore (Rs 16,113 million) versus Rs 1577.1 crore (Rs 15,771 million) in the previous quarter.

I was about to leave the IT scene today then suddenly I saw this.

There is a major accumulation of HCL Technology today. Lets wait till the result of HCL Technology is out, risk taking appetite is neccessary in Stock Market. I'll keep a stop loss at around Rs. 330/-.

IT STOCKS FOLLOW CYCLE

Tomorrow is an important day for market- Infosys result day. Market is going up and on its way up catching many experts on the wrong foot. The result will determine whether the market will go further up or may pause a bit with correction.
I am dependent on the result, for the IT stock HCL Technology, I have in my portfolio.
Good result will buoy it up. Market is already anticipating some good result, seeing the movement of IT stocks in last two sessions.

Stocks follow cycle. A company grows, matures and then declines. Best time to buy a stock is when it grows. At present it is India shining story, so most Indian stocks are growing. Rate of growth depends on management and business model. Some stocks have unique business model which is difficult and even impossible to copy. A good management can change the scenario of a business.

At present the growing Indian IT industry have some very good business model and robust management, which is evident from the growth of the companies. The top five Infosys, TCS, Wipro, Satyam and HCL Technology generally lead the way for the smaller companies.

I wonder if Rakesh Jhunjhunwala has some stake in IT industry. If not, why?

We are not at par with Chinese in manufacturing sector, it is their forte. But IT and ITES is our forte, if it goes wrong, there will be some grim picture to portray. Lets keep my finger crossed and ears open, and ready for action at the drop of a hat.

Am I as nervous as the market?

IS SENSEX ONLY A NUMBER?

Yesterday another milestone (15,000) achieved by Sensex or Indian Capital Market. Though market pundits tried to down play it by statingthat it was just another number waiting to be crossed, everyone including them were ecstatic. The Really Small and Helpless Investor (RSHI) will have renewed believe in the market.

Literally Sensex./ Nifty means nothing to small investors with very small amounts to invest in pricey Large-cap stocks. The dismal amount of dividends the index stocks yields in comparison to money invested is nothing. One of my friends (another RSHI) invested some good money around twenty Grands in ten shares of Infosys, the recent dividend he received was some pittance sixty five rupees only. It seems and is really worthless to have ten shares of an costly index stock, most of that sixty five rupees will be taken away by bank as transfer commission. I wonder why the dividends are not deposited in bank account directly. All Demat account holders must have a bank account and must be submitted while opening the Demat.

You can see the dividend declared by ONGC is another pinch of salt to injury. Had they not declared the dividends the stock price would have gone up leaving the small investors benefited. He would not have to deposit his cheque which the Bank Clark frown upon. The dividend payment policy is beneficial only to Big Investors and (for PSU) the Government, not to small investors. This is one of the main reasons the Really Small and Helpless Investor (RSHI) stays away from big index stocks, though the Large-cap stocks have shown excellent momentum in recent months.

The less costly Mid-cap and Micro-cap (Oh terminology! actually Small-cap) stocks do not provide this dilemma. The profits in most cases are utilized in expansion and stock price reacts.

(RSHI should preferably stay away from PSUs, I will have a public musing in this blog in coming days.)

I am very happy about the performance of Yes Bank, the run is not smooth but that’s a stock should do, correcting itself while going up.

Concern was about my second investment of HCL Technology, but CLSA predicted earning growth should be 62% for the next result. Only thing is rupee devaluation, Infy will lead the way as everybody believes. Probably wishes are shy away.

I purchased 100 stocks of IDBI at 117.90/- yesterday (with little conviction that market will not go down), but I have my own doubts. It was a spurt decision, will I repent later?

‘LARGE’-ly Lucky?

Stock market is a complex system, many factors plays their own part in it. There are so many variables that can influence the next second of it. At times they work for us and at again work against us. That is what traders believe as luck. So basically investing is stock market is to be at a place where one does not have to change his position of because of compulsion.

But generally greed takes over after some time with a growing stock. Being confident in ones position is a way to mask his greed. It is the human nature.
“Do not marry your stock” well said but investor generally do not marry his losing stock, only the slow moving stocks.
In the name of investment RSHI generally sit on their dead money hoping his money will grow at least as fast as the market. Are they at sea after investing in a good stock? At least that is true for me. I become so attached to my stock, that I can not even look beyond. Anything other looks bleak to me and I am not certain if the new stock will perform. I ignore, though aware, that if it does not perform, I can exit my position at any time.
Investing long term for small investor is a good way to increase his capital. But there is a better and safer way out, the mutual funds. They give good returns; even they beat some very good index stock over a year. The reason is simple; they are managed by professionals and have a hell lot of money (our money) in their kitty. They can effort to diversify and hence take risk. Long term investors should take recourse in mutual funds.
Really Small and Helpless Investor (RSHI) is in market to multiply their money as fast as possible by minimizing risks.

So far in this blog only Mid-cap and Small-cap stocks were discussed, as they are at a better position to grow. But in Indian market the Large-cap stocks are also as potential as Mid-caps as the market shows time and again.

Click to see the last three months rally of these Large-cap stocks

RELI: intrinsic value?
L&T: possible demerger?
BEML: diversified order book?
HDFC: merger on card?
SBI: split on card?

Are these stocks are still buy at dips?

Sensex/ Nifty are going too fast. It is too hot for RSHI to take a position more than a week even. Tread cautiously and book profit.
But if it goes even higher RSHI will miss the rally.

SMART MONEY AND DEAD INVESTMENT

I often hear people putting the term smart money here and there. To me, very simply put, smart moneys are those which are getting return, often beat the bank interest by a fair margin. It is for the interest of a Really Small and Helpless Investors to know or assess whether their money is smart enough in a long term investment.

My small capital can earn much more than the bank interest if I study the market and roll my money. I would rather prefer to roll my money for some quick gain instead of sitting on it, which is possible in the present bull market.
Diversification with a small capital is not a good idea, because there are much small head areas to diversify.
Risk aversion by being disciplined (not being greedy) is another key. Sell at my target price, at prefixed time period (whichever is early) and being courageous to book loss if necessary. It seems 10-20% profit in a month is a very good bet.
Timing the market is a dumb idea. Nobody can predict stock prices and choose correct timings; at best I can guess it.
Really Small and Helpless Investors (RSHI) are generally the last to be tipped off. I should apply discretion, to accept them.
Day trading is most risky, avoid even though there are enough time at my disposal.

After selling of Cummins I asked my broker to buy IFCI. As I knew the person for some time he came up with advice that I should not buy when the Sensex / Nifty is at its peak and asked me to wait for some time. I heeded his advice and repented after the day, IFCI made a nice run today. Missed bus carries no passenger. May be a correction is on anvil, after listing of DLF. Respect history.

The following stock are in my mind, I should study them

IDBI- It is ripe for one month investment for 10-20% growth.

Yes Bank- less than a month, next target may be Rs. 220/-. RSHI may exit below that level.

BLUNT DECISION MAKING IS AN ART NOT SCIENCE

The question of selling Cummins (500480.bo) frequented my mind all day long, and my friend told me to consider and search the followings for the company and not to regret in future
1. EPS
2. P/E
3. PEG
4. Operating profit margin
5. Net profit margin
6. ROE

I heard those terms before like most RSHI. But hardly have the time and resource to scout them for all the stocks I have in mind.

I have a “nine to five” job; it is a modest eleven hours per day including the journey time. I don’t have the confidence to give up my present job and start “stock”ing. Don’t have access to that kind of money too.

I don’t want to enroll myself to some SMS and Tips for Money Experts. I have seen them in performance, laundering money and giving peanuts in returns at best.

Stock price is a number that carries many information about the future prospect of a company. And also emotion plays a major role, if it takes over, the stock price and its valuations lose touch, the stock is then either over valued or undervalued. However the stock will correct itself accordingly in time. These are the thumb rule of the market.

But I am a very small investor. I cannot wait for the stock to correct itself aligning with its intrinsic value and that kind of blah-blah-blahs. I will sell the stock Cummins and book profit. I should not wail if the stock sees new highs. A bird in hand is better than two in bush.

Then where I will invest the proceeds? IFCI (ifci.ns) is not a bad candidate with a very low P/E and fantastic volume to boot. It is a momentum stock at present, already made a run. I will be aggressive and buy more if the stock corrects and hold it for about a month or two. Target: 20-30% growth of my small capital.

My second investment was HCL Technology (hcltech.ns), it seems the stock is not going anywhere, may be for the regained strength of Rupee. I have respect to the capability of Mr. Shiv Nadar. May be some good news in a week or so will push the stock up.

RULES & RUES

I have a set of rules for the RSHI, the Really Small and Helpless Investors.

1. The first is to cut losses.
2. The second is not to forget the first. With the small capital at his disposal a RSHI can not effort to lose his money.
3. The third is to find out what the herd is following, I can jump in the band wagon and jump out of it taking some profit, before anybody’s guess. Trick is not to be greedy there. The herd, in most cases, follows some tips which may not sustain for long.
4. The fourth is not to convert a losing trade to investment. Investment is something different, needs a through study on fundamentals. But in trade, it needs the study of the market sentiment. By Jove, some gut feelings too. Yes it is true “Do not follow the herd”. But swimming against the current needs lot of strength in wallet.
5. The fifth is to think about the consequences of a losing trade.

Now, to my previous investments, my first stock Cummins is going up and seems to go on and on. Already it has achieved my target. Now I am in dilemma? If I follow the market pundits I should book part profit after achieving the first target. But with that small numbers of stocks booking part profit means nothing. Again I can not effort to lose the profit if the market goes down. My gut feelings says the market will go up further, as it did not correct itself even after the mega issue of DLF, as most RSHI anticipated (influenced by prime time TV experts?). Should I wait for another week? These thinking occur to most RSHI, as they do not have the access to correct information and research.

It occurs to me now why most RSHI loses his money in stock market. Either they tend to sell the stocks when the stock has not reached its correct valuation or when the market goes down. Most cases they do not sell the stock in down market as they have to lose profit and they turn their trade to investment. Then they wait for agonizingly long period of time.

My case, I will ask my free advisors for their valuable tips. I have time as market is going to open on next monday. It seems I can not do away with market tips.