Friday, December 18, 2009
Thursday, December 17, 2009
Friday, November 27, 2009
- Scenario #1. Borrow dollars in US. It is almost free to borrow since you have to pay near zero interest on the dollar borrowed. Put this money to work in US itself by buying any high yielding asset like stocks, commodities, gold etc. As these assets appreciate you will be making money from capital given to you almost free of cost by US Govt. Isn't this a simple equation for making easy money?
- Scenario #2. Borrow dollars in US. Then sell dollars to buy another currency of a country where interest rate is higher, say India. This arbitrage situation if tapped in India can fetch a global investor about 5% profit through interest differential for doing next to nothing.
- Scenario #3. Borrow dollars in US. Sell dollars and buy currencies of different emerging markets especially the BRIC countries. Then employ this money in various high yielding risky assets and enjoy rapid appreciation.
- Investors who are short in dollar will cover their positions, making the dollar to appreciate with a spike.
- Massive unwinding of carry trade will take place with tremendous rush to buy back the dollar after exiting all trades like emerging market stocks, commodities, gold, et al.
- With dollar rallying significantly, prices of all other assets will plummet which will have the effect of bursting of asset bubble.
Tuesday, November 17, 2009
- Stock markets moved up from March 2009 lows primarily driven by huge liquidity, which in turn came into existence owing to generous stimulus packages from respective nations. Now there is apprehension that since the recovery in stock markets has been spectacular, there might be a case for withdrawal of stimulus packages by most nations. But the fact is that leaders of G-20 nations have promised to keep the stimulus packages in place for some more time. Premature withdrawal of stimulus can result in a prolonged depression as was witnessed during the Great Depression of 1929.
- Weakness in Dollar is pushing the commodity prices, oil prices, gold prices and also the stock prices higher. But any short term technical strengthening of dollar from here can send the other asset prices spiraling downwards. The moot question is when and that is creating nervousness in global markets. Lets see who blinks first!
Sunday, November 15, 2009
Sunday, November 8, 2009
- Absence of triggers from US markets will result in sideways movement in Indian markets. In such a situation you will find Dow Jones oscillating between 10150 and 9650. Likewise Sensex then could be lolling between 15000 and 16000, and Nifty could be lazying between 4700 and 5000. But if you ask my frank opinion, I will promptly label this situation as least probable.
- If there is positive TAT, then you will find Dow Jones closing above 10160 and racing towards 10360/10500 in subsequent sessions. In that situation you can expect Sensex to reach its tipping point between 18000 and 18800, and Nifty could be seen at level between 5320 and 5580.
- In case there is negative TAT, then Dow Jones will be closing below 9645 and tumbling towards 9100/9000 in subsequent sessions. In such a case Sensex could be seen trading between 14800 and 14200. Similarly Nifty could drop down between 4400 and 4200.
Friday, November 6, 2009
- Jobless claims had declined to their lowest levels in ten months.
- Productivity surged to 9.5% last quarter, which turned out to be much better than street expectation of 6.5%.
- Cisco systems delivered strong positive results.
Wednesday, November 4, 2009
- Union Finance Minister, Pranab Mukherjee came out strongly to assert that he is not contemplating withdrawal of stimulus package as of now. This dispelled a big fear out of the minds of investors.
- Deputy Chairman of Planning Commission, Montek Singh Ahluwalia reassured that India was ready to absorb the surge in foreign investment flows and in fact welcomed the same. In other words, sharp surge in foreign investments into India will not meet entry barriers as was the case in past. This was seen by FIIs as a paradigm shift from hawkish stance of India in dealing with excessive foreign investments. And this was given a thumbs up by market.
- With Justice Raveendran of Supreme Court recusing himself from three-judge bench hearing a high profile legal battle between billionaire Ambani brothers, the stage was set for much delayed verdict in the case. Justice Raveendran cited potential conflict of interest before withdrawing from the bench. This means a new bench has to be constituted and hearing has to begin from the very beginning. Reliance Industries benefits from the case becoming a long drawn affair. This news was cheered by traders who bought Reliance Industries with gay abandon and the scrip rose 5.2% in today's trade. Can the broader market then stay away from exhibiting bullish sentiments? The answer is an obvious 'No'.
- Finance Minister, Pranab Mukherjee reiterated that there will be many more disinvestments in state owned firms. “We are aiming at stake sales in public-sector undertakings (PSUs) that have less than 10% public holding,” he said. “A few more PSUs have been identified for disinvestment.” Those words sounded very sweet to the ears of traders and they demonstrated their joy by going on a buying spree.
On 02 Nov 2009 Dow Jones had showed its hand in moving northwards in short term. I had mentioned that as leadership for rest of the global markets in my last post. For quick reference click the link here- http://archana-archdeb.blogspot.com/2009/11/global-stock-markets-dow-comes-to.html
Leadership that Dow exhibited was to no avail. No global market was ready to follow Dow Jones' example. China was an exception, but then China always plays the market on its own terms - based on its economy's performance. But we were discussing Dow and its tenacity in holding on to sanity against global sell offs. The other way around is still not happening!!
But to be candid I must admit that Dow's strength yesterday had lot to do with some important events that took place. Take a look :-
- Warren Buffet's Berkshire Hathaway bought the railroad company Burlington Northern Santa Fe Corp in a mega-deal of $44 billion. This signals that Warren Buffet is betting big on revival of American economy. In his own words Warren Buffet described the deal as "It's an all-in wager on the economic future of the United States". With strong American revival there will be increased demand for power and Berkshire owns coal based power company MidAmerican Energy. This company will require coal to be hauled over long distances. That is also where acquisition of a railroad company comes into play, if you get the bigger picture. But in all intricate calculations, US economy surging ahead is what Warren Buffet is betting his last penny on. That is certainly good news for global markets, considering how coupled we all are!
- Experts expressed their considered opinion that Fed is not likely to hike any interest rates in its November meet. That acted as firm anchor for Dow in trade yesterday.
Tuesday, November 3, 2009
Thursday, October 29, 2009
- Punjlloyd buy at 180/185 for a target of 225 in short term.
- Canara Bank buy at 324/327 for a target of 357 in short term.
- DCHL buy at 45/47 for a target of 62 in short term.
- Dena Bank buy at 61/63 for target of 70 in short term.
- Dr Reddy buy at 950 for target of 1050 in two weeks.
- Voltas buy at 141/144 for target of 168 in two weeks
- Crompton Greaves buy between 340 and 350 for a target of 425 in short term.
- IDBI buy at 113/115 for a target of 128 in short term.
- IOB buy at 113/114 for a target of 126 in short term.
Saturday, October 24, 2009
- Centurytex Oct Fut. This position had an intra-day low of 488.35 and closed at 493.2. If you have bought around 495 you should be holding your position for next trading sessions. In worst case scenario it will give you 498.5 where you may exit without any injury. But if you are a little brave hearted then you should keep the position for a target of 550 till expiry. Maximum downside risk is 467. This I am advocating because this scrip is still maintaining its swing, and has also completed two long term bullish patterns, viz 'Cup and Handle' and 'Rounding Bottom'. Its actual worth is 920/950 in one year's time.
- LITL Oct Fut. This position had an intra-day low of 510.3 and closed at 513.75. If you have bought around 513 then you should be holding this position for next trading sessions. You will get an opportunity to exit between 533 and 541. Its actual potential though is 620 in short term.
- Nagarconst Oct Fut. The position had an intra-day low of 156.95 and closed at 159.2. If you have bought around 164 then you should be holding the position till minimum target of 170. Its actual worth is 220/240 in medium term of about six months because it has completed the long term strong bullish pattern of 'Rounding Bottom'. However before surging to 240 level it may retest the levels between 120 and 140.
- HDIL Oct Fut. The position made an intra-day low of 370.7 before closing at 375.85. If you have bought around 375 then you should be holding the position till minimum 390. The scrip is worth 500/515 in medium term of six months.
- Punjlloyd Oct Fut. The position touched an intra-day low of 255.2 and finally closed at 259.55. If you have bought at around 270 then you should be looking to exit at 277.
Friday, October 23, 2009
I still haven't answered my question.Why I didn't give recommendations to trade futures yesterday was because I was not certain. I didn't like the general sentiment developing across global markets. Whenever there is doubt creeping up in your mind just stay away from market. Let it do whatever it wants to do. The worst that will happen is that you will miss out a profitable trade or two. But then that is erring on the positive. At least this scenario cannot burn a hole in your pocket, nor take your peace of mind away. No sleepless night!
But today is different. The US markets have again taken the lead to show the direction and mind of the markets. Asian markets are pleasantly trading in green at 8.30AM IST and all seems to be fine up above.For day trading, today my recommendations are as under :-
1. Buy Centurytex Oct Fut at 495/500 for a target of 534. If you plan to keep it for tomorrow then this position should give 561 in couple of day's time.
2. Buy LITL Oct Fut at 513/518 for a target of 568. In case you hold the position till expiry then it should give you a target of 588 to 600.
3. Buy Nagarconst Oct Fut at 164/167 for a target of 171.If you plan to carry your position then you can see a target of 171/180 and finally 188/190 being achieved in couple of days.
4. Buy HDIL Oct Fut at 375/380 for a target of 400.
5. Buy Punjlloyd Oct Fut at 270/274 for a target of 286. If not today then you can keep it for tomorrow.
6. Buy DLF Oct Fut at 445/450 for a target of 465. You may plan to keep your position open also for a couple of days for a target of 500 plus
Wednesday, October 21, 2009
- HDIL Oct Fut. Buy one lot (lot size 774) of HDIL Oct Fut at 375/377 and square off after taking a profit of Rs 10/15.
- DLF Oct Fut. Buy one lot of DLF Oct Fut (lot size 800) at 447/449 and square off after taking a profit of Rs 15/20.
- Nagarconst Oct Fut. Buy one lot of Nagarconst Oct Fut (lot size 2000) at 160/162 and cover it after taking a profit of Rs 4/5.
- ICSA Oct Fut. Buy one lot of ICSA Oct Fut (lot size 2000) at 200/202 and take profit of Rs 5/6.
- Punjlloyd Oct Fut. Buy one lot of Punjlloyd Oct Fut (lot size 1500) at 276/278 and take profit of Rs 8/10.
Tuesday, October 20, 2009
Monday, October 19, 2009
Saturday, October 17, 2009
Friday, October 16, 2009
Nagarconst. Buy Oct Fut of Nagarconst at 174 and book quick profit by exiting around 178. Even with this small target you can make Rs 8000/- since the lot size is 2000. If the scrip comes down to 168.25 you can again buy and exit quickly at Rs 170/171. Finally you can buy again at 164/165.
HDIL. Buy Oct Fut of HDIL at 378/379 for a target of 384/385 and then 397/400.
LITL. Buy Oct Fut at 531/532 for a target of 544/550. In case the scrip shows lot of strength then you can get target of 563 and then 575/579. Going down, the level to enter trade will be 513/514 for quick profit of Rs 10/-.
ICSA. Buy Oct Fut of ICSA at 208/209 for a quick target of Rs 6/10.
Thursday, October 15, 2009
So what's the big deal to chronicle all this. There is reason because one of two open positions has already achieved its target. Oct Fut of Nagarconst was traded at the recommended buy price of 165.2 or at worst at 166. Target given was 179.5 for squaring off that position. In yesterday's trade the day high of Nagarconst was 179.5. Those of you who had bought this futures position would have closed your open position. This one position alone must have fetched you net profit of Rs 28000/- in 2 days.
But we still have one open position of Oct Fut in HDIL left. As per recommendation you would have entered trade at 358 and yesterday the position closed at 379.15. Target given for this scrip is 400. In all probability the target should be achieved in today's trading session. In case the scrip fails to reach 400 and you feel it is going to fall, then exit trade without hesitation. The arithmetic is simple. Even at yesterday's closing price you are making a profit of Rs 16000/- plus. Any time in today's trade you fear that the scrip might correct, or you are not feeling comfortable with its movement, just cover your position. You already are sitting in a neat profit of 28000+16000= Rs 44000/-. This profit has accrued in two trading sessions with capital investment of Rs 1.5 lakhs (approx). Wouldn't you agree that Nagarconst and HDIL have been Sultans of Swing!!
So all the very best in today's trading with the open position of Oct Fut HDIL. With global markets having closed in green and Asian markets presently trading also in green you should be able to add at least Rs 10000/- more to your existing profit of Rs 44000. Keep your eyes glued to HDIL.
Wednesday, October 14, 2009
Tuesday, October 13, 2009
Monday, October 12, 2009
Today's price action has confirmed that the swing is in place for the recommendations given in the last post for swing trade for 12 Oct 2009. Lets track the performance of the stocks futures recommended:-
HDIL. Lets assume that you have taken position today at 358. Position closed at 372.1 after making day high of 376.4. In case you are holding position for target of 400 as recommended, then its fine. But if you have done day trade, you would have profited Rs 14/- to Rs 18/- per share. As the lot size is 774 your intra-day profit should range between Rs 10000/- to Rs 14000/-.
Asian Paint. Day low was 1510 and so missed trade by Rs 10. Hence no profit no loss.
Nagarconst. Assuming you bought one futures position at 165.2, it went to high of 168.4 and closed at 167.3. If you are holding position for a target of 179.5 as recommended, then its good news. But if you have day traded then you would have made a profit between Rs 2/- to Rs 3/- per share. Since lot size is 2000, your profit should range between Rs 4000/- to Rs 6000/-.
Overall Day Profit = 10000+4000=Rs14000/-(minimum); 14000+6000=Rs20000/-(max), less brokerage.
Friday, October 9, 2009
The report card for day trading recommendations given for 09 Oct 2009 in my last post reads as follows:-
1. HDIL bought at end of day at 357 and closed at 357.2. Since it was for day trading, the position was to be squared up with no profit no loss. (Day low 356.1)
2. Nagar Const bought at 164 and squared up between 169 and 172 ie at 170.5. This trade gave a profit of Rs 13000(6.5x2000). (Day low 162.05)
3.Canbk bought at 343 and closed at 342.85 with a loss of Rs 120(0.15x800). (Day low 340)
4.ICSA bought at 205 and closed at 202, giving a loss of Rs 3600 (3x1200). (Day low 202)
Net profit = 13000-120-3600-1000(brokerage)= 8280, say Rs 8000/-
ICSA Oct Fut on both days did give return ranging from Rs 2500 to Rs 4000. But on both these days profit was not taken and finally ended up taking loss at the end of day. Futures' Day Trading lessons need to be drawn from this ICSA trade.
Lesson No 1
If you are day trading with multiple positions of different scrips, and if you have made handsome profit in one position, then protect that profit for the day by exiting other positions which are giving normal profit.This should be done even when these positions may not have reached the targets you have in your mind for them.
Buy HDIL Oct Fut at 357 for target of 375/386.
Buy Nagar Const Oct Fut at 164 for target of 169/172.
Buy Canbk Oct Fut at 343 for target of 352/358.
Buy ICSA Oct Fut at 205 for target of 211/214.
Thursday, October 8, 2009
Tuesday, October 6, 2009
Sunday, October 4, 2009
- Though Dow has been falling of late, but it is likely to take support from its trend-line and expected to move up to 10500 level as discussed in my last post.
- Nifty has resistance at 5300 which it should now test.
- Nifty is presently sailing near its supply zone of 5137-5300 which could be used as a Bear-Trap by bulls.
- Such a strong move up has to culminate in a strong sell signal in majority of indicators and patterns which should also include candlestick pattern and maybe an exhaustion gap. We have yet to witness any of that in Nifty's graph.
Friday, October 2, 2009
- Last correction of year 2000 lasted 3 years and we have completed only 2 years since this correction began in Oct 2007.
- Bottoming out process is generally a long drawn affair for such a vicious fall. That indicates some more time may be required for Dow to finally recover and surge ahead for another bull charge.
- Already news flow is turning negative in US, showing ugly signs of loss in confidence data.
- 50% pullback to the bear phase means Dow Jones should reach 10360, which it nearly has. So one can expect a fall from level of 10500.
Thursday, October 1, 2009
- US alone has to import oil worth $ 10 trillion to meet its demand over next 10 years.
- US economy can ill afford such ugly oil bill with real economy in tatters and debt situation getting out of control.
- With demand rising the existing oil fields may not be able to cope up with it, which can trigger a runaway oil price situation.
- The Wall Street Journal reported that output from existing oil fields is dropping by about 4.5% every year and by up to about 18% in some of the biggest oil fields in the North Sea, Alaska and the Gulf of Mexico.
- New York Times reported that many of the major oil exporting countries may have to begin importing oil within a decade to meet the rising energy demands from within their borders.
The scenario as sketched above has prompted US President Barack Obama to give Wind Energy a top priority for his administration. US is deftly positioning itself in Wind Energy to be ahead of the pack in the next revolution after IT. Researchers at Stanford University concluded that even if 20% of available wind can be harvested, it will meet the global energy demand seven times over. This is how serious US is about wind energy:-
- Green Chip Review estimates that by 2020 wind capacity in US will have grown by 360%.
- US Department of Energy recently confirmed that 20 % of America's electricity requirement can be met through wind energy by 2030. Presently only 1% is being met through wind energy.
- The wind industry in US is about to explode 20 times.
- New York mayor Michael Bloomberg has unveiled plans to outfit dozens of the city's skyscrapers, waterways and bridges with wind turbines.
- A cluster of wind farms south of Los Angeles will soon supply a large part of its electricity.
With so much seriousness how can the serious investors stay away. Bill Gates has picked up 9% stake in a wind energy company. Also consider the following investments in US:-
- British Petroleum is teaming up with Clipper Windpower to build a 5050 megawatt wind farm in eastern South Dakota.
- The Blackstone group, one of the top US private equity firms, has committed $ 1.6 billion to construct an offshore wind farm.
- Shell and TXU Energy have joined hands to build a 3000 megawatt wind farm in Texas.
- J P Morgan has already invested $ 4.4 billion into more than 40 US wind farms.
It seems that wind energy has finally arrived on the scene. Since 1990s cost of generating electricity from wind has dropped by about 80% and it is further getting more and more cost efficient by the day. That is why this industry is growing worldwide at a fast clip of 30% year on year. Experts feel that over next 5 years the number will further go up to 50% per year, thereby generating some $ 300 billion in revenues.
If you believe in this next revolution in offing, then do invest in some wind energy companies for at least 5 years. Returns can be astronomical!
Wednesday, September 30, 2009
Holding 250 shares @ Rs 88.5. Closing price on 29 Sep 09 was 83.25
Friday, September 25, 2009
Indian Budget 2009 has been criticised by all and sundry for lacking direction. It has been vilified as being neither developmental nor populist. Finance Minister has been accused of giving no tweak to the growth engines of India. But I was satisfied. Satisfied because what I had hoped for was finally delivered. Budget 2009 recognised the need to give impetus to two sectors - education and rural development. For acknowledging so, it can be termed as a watershed budget. The foresightedness of this budget needs to be appreciated. In the long run if India wants to be an economic superpower then these two sectors will have to be given due importance from now onwards. And Budget 2009 finally delivered on that score, albeit on an humble scale. I fully agree that such a tough decision was long overdue, but it is never too late to wake up. And India, it seems, is finally waking up!
Why I sound so emotional at this point is owing to the fact that I feel my prayers have been answered by Govt of India. In my blog post titled 'Indian Democracy - Road Ahead' on 16 Mar 2009, I had outlined two major areas, that is of education and rural development, towards which we should focus our energies. This is required to eradicate the ills that this country suffers from. And these ills have shackled us to a large extent from becoming what we richly deserve - a Global Superpower. I hope you can take some time off to revisit the blog post in order to co-relate my line of argument with the visionary provisions of Union Budget 2009. You may click the link for quick reference - http://archana-archdeb.blogspot.com/2009/03/indian-democracy-road-ahead.html
Now to business. If you agree to my point of view and that of Indian Govt, start investing in companies engaged in education and rural development sectors. Do a top down analysis and home on to scrips in these two sectors for long term investment. Not only will you be making a killing , but also be participating in the growth drivers of strong India. A win-win situation for all, wouldn't you say?