Foreign institutional investors have sold equities worth Rs 79,526 crore in the Indian markets since October as a series of regulations, including curbs on investments through participatory notes (P-notes) and turmoil in the domestic financial markets have made investments in India less attractive.
While the circular on P-notes is just one among several reasons for this heavy selling, at least some of the entities, which have unwound their positions in the Indian markets, have taken positions in the Singapore Exchange CNX Nifty futures, say experts.
Interestingly, the volume of trading in the Nifty futures shifting to the Singapore Exchange has gone up in the same period. The share of SGX Nifty, as a percentage of the total Nifty futures OI, rose from 5.6 per cent to 8 per cent immediately after the P-note curb and stood at a robust 31.5 per cent till April, a recent report by Edelweiss said.
"P-note holders, who have unwound their positions in the Indian markets, have taken fresh positions in the SGX CNX Nifty futures till the time they get registered as FIIs with Sebi. The transaction cost is also high especially for FIIs who run a long-short P-note book... These FIIs can roll over their Nifty positions at SGX or Nifty but they prefer SGX because of lower costs," said Yogesh Radke, research analyst at Edelweiss Capital. SGX Nifty transaction cost is as low as 2-3 basis points in the absence of the securities transaction tax.
FIIs trimmed their holding in the BSE 500 companies by nearly two percentage points to 17.8 per cent, bringing it back to June 2005 levels, according to a recent Citigroup report.
Domestic institutional investors (DIIs) have been buyers of equities worth Rs 56,448 crore in the same period. The data compiled by exchanges includes buying and selling transactions in the secondary markets as also block deals.
According to Sebi data, FIIs have sold equities worth Rs 25,054 crore in the cash market. The Sebi data considers all investments, which include FCCB conversions, investments in ADR/GDR and secondary market transactions.
In October last year, Sebi had restricted P-notes investments in the derivatives market, asking the investors to unwind their positions within 18 months. At the same time, the regulator permitted P-notes investment in the cash market up to 40 per cent of the FIIs' assets under custody. Experts said that part of it may be attributed to the Sebi's clampdown on P-notes.
"/Nearly eight months have gone by since the P-note circular was brought out by Sebi. The markets are yet to see a lot of unwinding of positions which will happen in the next 10 months. This will definitely not help the markets," said the research head of a domestic broking house, who did not wish to be named.../
However, there are differing views on this with some market participants feeling that the fundamental picture has changed for the Indian economy, thanks to soaring crude oil prices and a growing fiscal deficit, which have bothered FIIs.
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Monday, 23 June 2008
FIIs shifting to Singapore
Thursday, 19 June 2008
Live Crude Oil Chart
Dukascopy: Swiss interbank forex broker provides marketplace and highest liquidity for on-line forex trading.
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Wednesday, 18 June 2008
Report - for Wednesday 18th
Stock / Index Previous Day Close Previous Day % Change Buy / Sell Target One Target Two Stop Loss Horizon NIFTY FUT 4634.70 1.39% Buy 4668.60 4691.15 4595.00 INTRA DAY CAIRN 277.70 -1.26% Buy 282.60 285.40 274.85 INTRADAY CUMMINSIND 270.60 0.91% Buy 276.80 278.90 265.85 INTRADAY INDHOTEL 103.55 0.88% Buy 106.80 108.95 100.55 INTRADAY TCS 921.30 1.15% Buy 937.70 950.50 898.90 INTRADAY
----- With due apologies and full credits to ncr on web dot com
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Monday, 16 June 2008
Report - for Monday 16th
Stock / Index Previous Day Close Previous Day % Change Buy / Sell Target One Target Two Stop Loss Horizon NIFTY FUT 4484.80 -0.72% Buy 4515.10 4545.00 4452.65 INTRA DAY ABB 956.60 -0.56% Buy 976.90 988.25 939.80 INTRADAY DLF 480.25 -3.46% Buy 500.80 514.90 469.00 WEEK DAYS RCOM 543.15 0.38% Buy 555.00 564.40 531.80 WEEK DAYS SBIN 1335.20 -0.32% Sell 1308.40 1282.75 1364.55 INTRADAY
----- With due apologies and full credits to ncr on web dot com
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Saturday, 14 June 2008
Live BSE & NSE Ticker
Please note that the ticker here may not work. Kindly open the NSE site so as to be able to see the NSE ticker on the top.
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Thursday, 12 June 2008
Why Oil prices are rising
The impending collapse of the US dollar on account of the inherent weakness in the US economy caused by its structural weakness as reflected in the sub-prime crisis; The repeated softening of the interest rates in the US that has the potency to kill the US dollar; and How the fall in the US dollar suits the US corporate sector, especially its omnipotent financial sector.
Naturally, since the past few years, the US financial sector has begun to turn its attention from currency and stock markets to commodity markets. According to The Economist, about $260 billion has been invested into the commodity market -- up nearly 20 times from what it was in 2003. Coinciding with a weak dollar and this speculative interest of the US financial sector, prices of commodities have soared globally.
And most of these investments are bets placed by hedge and pension funds, always on the lookout for risky but high-yielding investments. What is indeed interesting to note here is that unlike margin requirements for stocks which are as high as 50 per cent in many markets, the margin requirements for commodities is a mere 5-7 per cent.
This implies that with an outlay of a mere $260 billion these speculators would be able to take positions of approximately $5 trillion -- yes, $5 trillion! -- in the futures markets. It is estimated that half of these are bets placed on oil.
Oil price hike: Govt can't save you: PM Readers may note that oil is internationally traded in New York and London and denominated in US dollar only. Naturally, it has been opined by experts that since the advent of oil futures, oil prices are no longercontrolled by OPEC (Organization of Petroleum Exporting Countries). Rather, it is now done by Wall Street.
This tectonic shift in the determination of international oil prices from the hands of producers to the hands of speculators is crucial to understanding the oil price rise.
Today's oil prices are believed to be determined by the four Anglo-American financial companies-turned-oil traders, viz., Goldman Sachs, Citigroup, J P Morgan Chase, and Morgan Stanley. It is only they who have any idea about who is entering into oil futures or derivative contracts. It is also they who are placing bets on oil prices and in the process ensuring that the prices of oil futures go up by the day. But how does the increase in the price of this oil in the futures market determine the prices of oil in the spot markets? Crucially, does speculation in oil influence and determine the prices of oil in the spot markets?
Answering these questions as to whether speculation has supercharged the demand for oil The Economist, in its recent issue, states: 'But that is plain wrong. Such speculators do not own real oil. Every barrel they buy in the futures markets they sell back again before the contract ends. That may raise the price of 'paper barrels,' but not of the black stuff refiners turn into petrol. It is true that high futures prices could lead someone to hoard oil today in the hope of a higher price tomorrow. But inventories are not especially full just now and there are few signs of hoarding.'
On both counts -- that speculation in oil is not pushing up oil prices, as well as on the issue of the build-up of inventories -- the venerable Economist is wrong.
The finding of US Senate Committee in 2006 In June 2006, when the oil price in the futures markets was about $60 a barrel, a Senate Committee in the US probed the role of market speculation in oil and gas prices. The report points out that large purchase of crude oil futures contracts by speculators has, in effect, created additional demand for oil and in the process driven up the future prices of oil. The report further stated that it was 'difficult to quantify the effect of speculation on prices,' but concluded that 'there is substantial evidence that the large amount of speculation in the current market has significantly increased prices.'
The report further estimated that speculative purchases of oil futures had added as much as $20-25 per barrel to the then prevailing price of $60 per barrel. In today's prices of approximately $130 per barrel, this means that approximately $100 per barrel could be attributed to speculation! But the report found a serious loophole in the US regulation of oil derivatives trading, which according to experts could allow even a 'herd of elephants to walk to through it.' The report pointed out that US energy futures were traded on regulated exchanges within the US and subjected to extensive oversight by the Commodities Future Trading Commission (CFTC) -- the US regulator for commodity futures market.
In recent years, the report however pointed out to the tremendous growth in the trading of contracts which were traded on unregulated OTC (over-the-counter) electronic markets. Interestingly, the report pointed out that the trading of energy commodities by large firms on OTC electronic exchanges was exempted from CFTC oversight by a provision inserted at the behest of Enron into the Commodity Futures Modernization Act in 2000.
The report concludes that consequential impact on account of lack of
market oversight has been 'substantial.' NYMEX (New York Mercantile Exchange) traders are required to keep records of all trades and report large trades to the CFTC enabling it to gauge the extent of speculation in the markets and to detect, prevent, and prosecute price manipulation. In contrast, however, traders on unregulated OTC electronic exchanges are not required to keep records or file any information with the CFTC as these trades are exempt from its oversight. Consequently, as there is no monitoring of such trading by the oversightbody, the committee believes that it allows speculators to indulge in price manipulation.
Finally, the report concludes that to a certain extent, whether or not any level of speculation is 'excessive' lies entirely in the eye of the beholder. In the absence of data, however, it is impossible to begin the analysis or engage in an informed debate over whether our energy markets are functioning properly or are in the midst of a speculative bubble. That was two years back. And much water has flown in the Mississippi since then.
The link to the spot markets Now to answer the second leg of the question: how speculators are able to translate the future prices into spot prices. The answer to this question is fairly simple. After all, oil price is highly inelastic -- i.e. even a substantial increase in price does not alter the consumption pattern. No wonder, a mere 3-4 per cent annual global growth has translated into more than a 40 per cent annual increase in prices for the past three or four years.
But there is more to it. One may note that the world supply and demand is evenly matched at about 85 million barrels every day. Only if supplies exceed demand by a substantial margin can any downward pressure on oil prices be created. In contrast, if someone with deep pockets picks up even a small quantity of oil, it dramatically alters the delicate global demand-supply gap, creating enormous upward pressure on prices. What is interesting to note is that the US strategic oil reserves were at approximately 350 million barrels for a decade till 2006. However, for the past year and a half these reserves have doubled to more than 700 million barrels. Naturally, this build-up of strategic oil reserves by the US (of 350 million barrels) is adding enormous pressure on the oil demand and consequently its prices.
Do the oil speculators know of this reserves build-up by the US and are indulging in rampant speculation? Are they acting in tandem with the US government? Worse still, are they bordering on recklessness knowing fully well that if the oil prices fall the US government will be forced to a 'Bears Stearns' on them and bail them out? One is not sure. But who foots bill at such high prices? At an average price of even $100 per barrel, the entire cost for the purchase of this additional 350 million barrels by the US works out to a mere $35 billion. Needless to emphasise, this can be funded by the US by allowing it currency printing presses to work overtime. After all, it has a currency that is acceptable globally and people worldwide are willing to exchange it for precious oil. No wonder Goldman Sachs predicts that oil will touch $200 to a barrel shortly, knowing fully well that the US government will back its prediction.
And, in the past three years alone the world has paid an estimated additional $3 trillion for its oil purchases. Oil speculators (and not oil producers) are the biggest beneficiaries of this price increase.In the process, the US has been able to keep the value of the US dollar afloat -- perhaps at an extra cost of a mere $35 billion to its exchequer! The global crude oil price rise is complex, sinister and beyond innocent economic theories of demand and supply. It is speculation, geopolitics and much more. Obviously, there is a symbiotic link between the US, the US dollar and the oil prices. And unless this truth is understood and the link broken, oil prices cannot be controlled.
----- With due apologies and full credits to 'anonymous'
Is Nifty that bad ? - 2610 coming ?
Have a look at this nifty end of day chart send by one gentleman. Whew ! Are we looking that bad ? Well well ..... this is just a view. For that bad Indian markets shall have to be at dirt cheap valuations at which level every citizen of the world would rush to invest. Let us hope this is just a level and should not venture to ! God bless !
posted later :
24 October - And we are at 2610 !
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Wednesday, 11 June 2008
FnO
Following is a list of top gainers and losers in the futures and options market in the NSE on the 10th June 2007 for the June series: Top Gainers % CHANGE SYMBOL OPEN HIGH LOW CLOSE IN O.I. RANBAXY 528 570.7 528 564 51.82 STAR 158 166 157.5 161.85 31.36 NICOLASPIR 367.95 382 367.95 372.2 22.81 GESHIP 458.5 470 423.5 431.7 22.03 CIPLA 204.05 212.9 203.5 211.7 16.19 SUNPHARMA 1445.5 1501.35 1445.5 1473.6 13.24 CHAMBLFERT 74.15 80.2 73.2 78.65 12.72 SUZLON 257 271.8 249 270.1 12.22 BHARTIARTL 780 785 758.3 777.95 11.38 BANKINDIA 251.1 262.3 244.5 254.8 11.35 HCLTECH 290.15 292.05 278.2 282.8 10.69 Top Losers % CHANGE SYMBOL OPEN HIGH LOW CLOSE IN O.I. AIAENG 1395 1410 1377 1389.4 -14.68 FINANTECH 1549.7 1550 1475 1513.6 -9.25 NDTV 385.6 385.6 370.1 374.9 -8.29 INDIANB 105.1 109.25 105.1 108.75 -8.28 ROLTA 292.9 309 292 304.85 -8.19 NAGARCONST 175 186.8 175 179.05 -7.84 BPCL 274.25 287 274 284.3 -7.63 NEYVELILIG 107.7 111.75 105.9 110.55 -7.52 BATAINDIA 136.5 143.7 136.5 141.2 -6.46 SESAGOA 3675 3818 3655.5 3750.8 -6.38 ARVINDMILL 38.5 39.7 37.7 38.55 -5.96 I-FLEX 1187.4 1227 1178 1199.8 -5.95 J&KBANK 601 614 598 606 -5.88 EDELWEISS 613.15 635 590 608.25 -5.46 APIL 463.25 474 441.2 449.85 -5.27
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Monday, 9 June 2008
Wednesday, 4 June 2008
Nifty - for Wednesday 4th
Nifty on Monday and Tuesday took a royal beating falling steadily without hope and a gap down day too. An hour or so into trading today we did see a steady and definite amount of pull back. Was this a bounce (dead cat) ? Too much in too short a time definitely warrented a recovery. How long can we sustain this ? As per end of day candle charts, a bullish candle pattern was formed for today. What does it imply ? Ideally it can imply a reversal as well ..... But we are not forced to take that stand. It can be strong to jack up the market a little up to say 4757 or 4795. 4833 and over will signal some relief for all. Today the recovery was .236 of the last down move of 4 days. Nifty can start on Wednesday on a soft to weak note and then remain a little down and try to recover back not breaking the bottom of Tuesday. Can we go long ? For long term? If you read the earlier article of http://trade-indian-stock-market.blogspot.com/2008/05/nifty_22.html we in fact did the first out of the three targets of 350 points down from 5000 level. We just need some big or even small bad news to trigger off a reaction. So cautious is the key word. Or trade quick and get out quick is the name of the game. If not able to comprehend the tomorrow, it is better not to take buy today sell tomorrow or sell today buy tomorrow trades even. Take each day as it comes.
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Monday, 2 June 2008
Report - for Monday 2nd
Stock / Index Previous Day Close Previous Day % Change Buy / Sell Target One Target Two Stop Loss Horizon NIFTY FUT 4850.10 -0.18% Buy 4889.15 4908.25 4814.90 INTRA DAY ABB 1023.60 2.90% Buy 1039.15 1059.70 999.85 INTRADAY BHEL 1663.05 4.09% Buy 1689.15 1706.55 1644.85 INTRA DAY HEROHONDA 746.15 -4.09% Buy 767.40 782.25 724.90 WEEK DAYS SBIN 1445.00 -1.11% Buy 1474.90 1487.85 1432.10 INTRADAY
----- With due apologies and full credits to ncr on web dot com
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Alpha Stocks
You can choose to be a beta grazer. Simply put, that means try and invest in stocks which are benchmarked to the index. Or you can choose to be an alpha hunter. Simply put, that means taking a more aggressive stance that’s based on the risk-adjusted return of an individual stock. And we believe this is the time to be an alpha hunter rather than a beta grazer.
So, what is alpha hunting all about? For that, we need to try and understand this new animal called alpha in slightly greater detail. It is the excess return on and above the risk-adjusted return of a stock. The performance of any portfolio is usually compared against some benchmark index on a riskadjusted basis. So, many a times, the portfolio manager loves to pick up those stocks which have the potential to generate returns in excess of their expected risk-adjusted returns. One of the measures of risk-adjusted return is the return obtained through the popular capital asset pricing model (CAPM).
For example, if the risk-free rate (the yield on 10-year treasury bill) is 7%, the return on index (Sensex or Nifty) is 20% and the beta of the stock is 0.9, then the risk-adjusted return by CAPM model equals to 18.7%. If the actual return by the stock is 20%, then the stock is said to have generated positive alpha of 1.3%.
For a savvy investor, any positive alpha means the excess return on and above the risk-adjusted return expected out of that stock. So, it is very important for any investor to be aware of the stocks which have the potential to generate positive and negative alpha.
To help our readers in identifying such stocks, ETIG carried out an analysis to find out the stocks which have generated positive alpha for the past seven years. To increase the universe of our analysis, we have considered a bigger sample — stocks forming part of the BSE 500 index.
The domestic stock market started evolving in a mature way from the beginning of this millennium and hence, we have considered the past seven years for the analysis. Since this is a statistical analysis, the consistency of all data points is very important. So, we have taken only those stocks within the BSE 500 index, which have been present in the index for the past seven years. We managed to find 270 stocks which met this criterion.
For calculating the return, we have considered the financial year as the annual period. To avoid any biased effect of a particular day, instead of considering the closing price on a particular day, we have considered the average monthly price for the month of April and calculated the annual returns. Then we calculated the annual return for each of these seven years.
While calculating the CAPM return for a particular year, we considered the beta of the individual stock for each fiscal year. Similarly, the yield on 10-year treasury bill has been considered as risk-free rate. The CAPM return is finally subtracted from the actual return for the year to arrive at the alpha.
The final analysis threw up some interesting results and surprises. There are only five stocks, which have consistently generated positive alpha for the past seven years. And surprisingly, these are not the most coveted stocks in the market.
These five stocks are Aban Offshore, Crompton Greaves, Kotak Mahindra Bank, HDFC and Asian Paints. The average alpha for all these stocks ranges from a low of 15% to as high as 108%.
To cross-check our analysis, we introduced another parameter called ‘Treynor ratio’. It is the excess return of a stock over a riskfree rate per unit of risk (which is measured in terms of stock beta). Though the top two stocks retained their position, Asian Paints moved up one notch from the fourth position to the third, by replacing the Kotak Mahindra Bank.
HDFC continued to be at the fifth position. The average annual return for all these stocks in the past seven years ranges from 42% to 132%.
There is no doubt that these five stocks are the top performers, but, there are still many stocks which have performed reasonably well. If we remove the constraint of consistency, there are around 23 stocks which have generated positive alpha in six out of seven years.
This means, there is a probability of more than 80% that these stocks can generate a positive alpha in any given year. Some of the prominent stocks in this list include Axis Bank, Bharat Heavy Electricals (Bhel), Siemens, Sun Pharma and Godrej Industries.
The average alpha for all these 23 stocks works out to 55%. However, the top three are relatively smaller stocks — Balkrishna Industries (148%), Jubilant Organosys (125%) and Godrej Industries (88%). While we talked so much about the best of the breed, one should also be aware about the laggards.
The good news is that there is not a single stock which has consistently generated negative alpha. But there are seven stocks which have generated negative alpha in six of the past seven years. These seven stocks are Castrol India, Cipla, Himachal Futuristic, MTNL, Mysore Cement, NIIT and Zee Entertainment.
Most of them have generated an average alpha of -15%. Investors are advised to be careful while picking up these stocks for their portfolio. Though the past performance is no guarantee for the future, it certainly increases the probability of success.
For that matter, any stock recommendation (whether fundamental or technical) is based on probability only. Hence, investors should keep a close watch on these five stocks and may add them to their portfolios at suitable entry points.
----- With due apologies and full credits to Economic Times
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Report - for Monday 2nd
RESEARCH: MERRILL LYNCH
RATING: BUY
CMP: Rs 425
MERRILL Lynch retains its ‘buy’ rating on IndianOil (IOC) with a price target of Rs 507. The target price is based on a P/E multiple of 7x on FY09E consolidated EPS of Rs 57. The target prices include the market value of IOC’s investments in ONGC, Petronet LNG and Gail of Rs 142 per share. IOC’s FY09E earnings forecast is higher than its FY07 earnings (Rs 50.2/share), but lower than the forecast for FY08E (Rs 95/share). The P/E used by Merrill Lynch to value IOC is lower than Asian refiners’ average FY09E/08E P/E. IOC’s consolidated EPS for FY08 jumped by 37% y-o-y to Rs 69 per share. It was mainly driven by a 115% y-o-y rise in refining margins ($9/bbl versus $4.2/bbl in FY07) and inventory gains in FY08 vis-Ã -vis a loss in FY07. Other income also surged 84% y-o-y to Rs 5,100 crore. IOC trades at attractive valuations of 6.1-7.4x on FY08-09E EPS. The downside risks for IOC include: (1) Government fails to issue enough oil bonds to keep IOC in the black; (2) Government reverts to a cost-plus based regulated pricing mechanism; (3) Steep decline in regional refining margins, and hence, IOC’s refining margins to levels below those assumed by Merrill Lynch; and 4) Steep decline in the market price of ONGC, Petronet LNG and Gail.
TATA MOTORS
RESEARCH: MACQUARIE
RATING: OUTPERFORM
CMP: Rs 577
FOLLOWING Tata Motors’ financing plan, Macquarie expects the company’s fully diluted equity base to rise by 44-48%, depending on the price. In FY03-09, the basic number of shares can increase by 30-35%, while the remainder will be converted in 3-5 years. The rights issue is set to be priced at around Rs 350/share; while the subsequent convertible preference shares should be at a conversion price of Rs 450-500/share. In addition, Jaguar Land Rover (JLR) will raise debt on its balance sheet. The management has cautioned against extrapolating Q1 CY08 profit ($421 million) of JLR into the full year. Further details on the profitability of JLR are expected in June. Operating environment for the core automotive business remains tough. Profitability remains under pressure due to strong raw material costs. The standalone pre-exceptional profit at Rs 480 crore was well below estimates. The operating margins were disappointing at 9.1% (down 196 bps y-o-y).
MAHINDRA & MAHINDRA
RESEARCH: CITIGROUP
RATING: BUY
CMP: Rs 593
MAHINDRA and Mahindra (M&M)’s reported PAT of Rs 221 crore was buoyed by an exceptional gain following the restructuring of the holdings among group subsidiaries. The management has indicated that pricing in both key segments — utility vehicles (UV) and tractors — remains fairly buoyant and rising cost pressures will be passed on, but margins can decline further, given the harsh commodity price environment. The sharp uptick in capital costs is disconcerting. There are downside risks to the estimates on account of escalating capital costs, given the company’s aggressive capital expenditure programme of Rs 9,000 crore over the next three years. Citigroup forecasts 12-13% growth in the UV business, in line with the management’s outlook and sees some downside risks to the forecast for the tractor business (currently 7% CAGR over FY09/10E), given issues with regard to availability of credit, and also the growing moral hazard within the banking sector that can further starve the sector of credit over the long term.
EVEREST KANTO CYLINDER
RESEARCH: CLSA
RATING: BUY
CMP: Rs 315
CLSA reiterates its ‘buy’ recommendation on Everest Kanto Cylinder and indicates a 17% upside on a 12-month basis. Everest Kanto, the high-pressure cylinder manufacturer of CNG and industrial cylinders, reported 45% PAT growth for FY08, in line with expectations. Net sales for FY08 stood at Rs 530 crore, up 24.4% y-o-y (up 31% y-o-y on a like-for-like basis, excluding trading revenues from FY07). The company sold ~6,53,000 cylinders in FY08, of which, 3,98,000 were for CNG applications, while the balance was for industrial purposes. CNG cylinders account for 60% of the mix by unit volume, but 72% of sales by value. Total debt on the balance sheet is $75 million, of which, $45 million is on account of the company’s bank-guaranteed debt for the acquisition of the jumbo cylinder manufacturing unit of CP Industries. The annual cost of debt is about 7%. Everest Kanto has spent $66.3 million for the large pressure vessel plant of CP Industries, incorporating step-down subsidiaries in Hungary and the US. This division complements the product portfolio of Everest Kanto, which already has CNG and industrial cylinders in its fold, with high-value jumbo cylinders. The company expects to produce 3,500 jumbo cylinders in FY09 and expects realisations of about $15,000 per unit. There is an 11% translation loss on consolidation of Dubai accounts in Indian rupees due to the depreciation of the US dollar.
SIEMENS INDIA
RESEARCH: INDIABULLS FINANCIALS
RATING: HOLD
CMP: Rs 560
INDIABULLS Financials reiterates its ‘hold’ rating on Siemens India. Siemens’ lacklustre performance of Q1 FY08 continued in Q2 FY08, as revenues grew by a meagre 0.6% y-o-y. Lower revenue, coupled with a tepid order inflow, translates into lower visibility on earnings potential. But considering the conducive demand for power, automation, industrial services and healthcare products, Indiabulls believes Siemens can win base orders to ensure an RoE of 27-30% over the next two years. The management is confident of doubling revenues by ’10. To meet this target, it plans to expand its transformer manufacturing capacity, start manufacturing turbines and optimise its existing processes. At CMP, the stock trades at a forward P/E of 29.4x its FY08E and 21.8x its FY09E earnings. Siemens believes its nearterm EPS may face the impact of disposal of value-accretive businesses and higher costs during Q2 FY08. Indiabulls has cut the company’s earnings forecast for FY08E and FY09E by 13.5% and 11.1%, respectively, to factor in cost escalation. So, Siemens may report a CAGR of 22.2% in revenues and 21.5% in earnings over FY07-09E. Based on Indiabulls’ DCF valuation, the stock is fairly valued and no major upside from current levels is foreseen.
ING VYSYA BANK
RESEARCH: HSBC
RATING: UNDERWEIGHT
CMP: Rs 291
AFTER lagging its peers in loan and deposit growth, ING Vysya Bank has been showing signs of recovery. Growth in advances improved to 22% in FY08 from 17% in the previous year. Growth in total deposits accelerated to 33% from 16%. This helped the bank to improve its market share to 0.6% from 0.5%. High cost ratios vis-Ã -vis its peers have been a stress point for ING Vysya Bank. While the bank’s cost-income ratio has fallen marginally y-o-y, it continues to be higher than for most peers. The main reason for this is employee productivity, which has shown little improvement over the past year, despite continued investment in branches and employees. The focus on opening new branches in urban areas can help alleviate stress in the long term, though near-term respite looks unlikely. HSBC raises its net profit forecasts for FY10 and initiates forecasts for FY11. The revised target price of Rs 270 is 8% higher than the previous target price. HSBC benchmarks the returns of ING Vysya Bank against select state-owned and private sector banks under its coverage. The bank continues to lag its peers in key profitability metrics due to low margins and high cost ratios.
-----With due apologies and full credits to Economic Times
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Sunday, 1 June 2008
Five Chart Patterns you need to know
So you’re a believer. You believe there are profits to be made in stocks. You believe you don’t have to pay a high-profile Wall Street banker to make money. You believe the average Joe can earn a healthy fortune using the right system. And you are dead-set on figuring that system out.We agree with you. We believe that with the right tools, anyone can make consistent money in stocks. These stock patterns pave the way 10%, 15%, even 20% gains for each winning trade. True, not the 2000% some people are touting. But it’s darn good money, made using an established strategy, and attainable at relatively low risk. It’s realistic money. And you don’t have to trust your hard-earned cash to some broker’s favorite fad. In the next few pages, you’ll learn all the skills you need to recognize proven money-making stock patterns, and you’ll get to see these patterns in action. We’ll also introduce you to our ChartAdvisor system – Three Simple Steps to Stock Profits. Whether you decide to continue with ChartAdvisor or not, after reading this guide, you’ll … Discover How To: 1. Identify profitable stock patterns Make money on the stock market You’ll learn how to make big money on stocks using a technical analysis toolkit that has been wielded successfully for hundreds of years. That’s no exaggeration. That makes these patterns some of the most time-tested strategies in finance. You can feel secure that you are trusting your investments to a highly refined system – not a new craze or an analyst’s hunch. There are hundreds of patterns in stock charts that traders can look for, but at ChartAdvisor, we focus only on the most trusted. Profitable Pattern Number One You’ll recognize the symmetrical triangle pattern when you see a stock’s price vacillating up and down and converging towards a single point. Its back and forth oscillations will become smaller and smaller until the stock reaches a critical price, breaks out of the pattern, and moves drastically up or down. The symmetrical triangle pattern is formed when investors are unsure of a stock’s value. Once the pattern is broken, investors jump on the bandwagon, shooting the stock price north or south. How to Profit from Symmetrical Triangles Symmetrical triangles are very reliable. You can profit from upwards or downwards breakouts. You’ll learn more about how to earn from downtrends when we talk about maximizing profits. If you see a symmetrical triangle forming, watch it closely. The sooner you catch the breakout, the more money you stand to make. Watch For: As with all patterns, knowing when to get out is as important as knowing when to get in. Your target price is the safest time to sell, even if it looks like the trend may be continuing. • Entry price plus the pattern’s height for an upward breakout. ChartAdvisor has a long history of identifying symmetrical triangle patterns. Over the last two and one-half years, ChartAdvisor has brought to its readers over 20 symmetrical triangle patterns. That’s an average of one every month and a half. Profitable Pattern Number Two How to Profit from Ascending and Descending Triangles Ascending and descending triangles are short-term investor favorites, because the trends allow short-term traders to earn from the same sharp price increase that long-term investors have been waiting for. Rather than holding on to a stock for months or years before you finally see a big payday, you can buy and hold for only a period of days and reap in the same monster returns as the long-time stock owners. As with many of our favorite patterns, when you learn to identify ascending and descending triangles, you can profit from upwards or downwards breakouts. That way, you’ll earn a healthy profit regardless of where the market is going. Watch For: Set Your Target Price: For ascending and descending triangles, sell your stock at a target price of: • Entry price plus the pattern’s height for an upward breakout. Ascending and descending triangles are some of our most popular patterns, because their features are so clear and the breakouts are almost always fast and furious. We features an average of two of these cash cows per month, making them one of the most prevalent and predictable patterns in your toolbox. Profitable Pattern Number Three How to Profit from the Head and Shoulders Pattern • Short sell as soon as the price moves below the neckline after the descent from the right shoulder. Set Your Target Price: For the head and shoulders pattern, buy shares at a target price of: • Entry price minus the pattern’s height (distance from the top of the head to the neckline). ChartAdvisor Head and Shoulders Pattern in Action Profiting from a downtrend can seem counterintuitive at first, but chartadvisor readers soon learn the benefits of being able to profit in up OR down markets. Profitable Patterns Number Four and Five But don’t panic if your double bottom or double top patterns do not develop as you had originally thought. You haven’t lost your chance for cash. If your W or M pattern reverses for a fourth time, you could now be working with the profitable triple bottom or triple top. Double Bottom Pattern Double Bottom Pattern Purchase When: • The price exceeds the middle-peak price. Watch For: • A price increase of 10% to 20% from the first trough to the middle peak. Set Your Target Price: For the double bottom pattern, sell your stock at a target price of: • Entry price plus the pattern’s height (distance from the peak to the bottom of the lowest trough). Double Top Pattern Double Top Pattern Short Sell When: • The price drops below the middle-trough price. Watch For: • A price decrease of 10% to 20% from the first peak to the middle trough. Set Your Target Price: For the double top pattern, buy shares at a target price of: • Entry price minus the pattern’s height (distance from the trough to the top of the highest peak). Triple Bottom Pattern • The price exceeds the resistance established by the prior peaks. Watch For: • A series of three identical troughs at the end of a prolonged downtrend. Set Your Target Price: For triple bottom patterns, sell your stock at a target price of: • Entry price plus the pattern’s height (distance from the resistance to the bottom of the lowest trough). Triple Top Pattern Purchase When: • The price falls below the support that formed from the prior troughs. Watch For: • A series of three peaks at relatively the same level. Set Your Target Price: For triple top patterns, buy shares at a target price of: • Entry price minus the pattern’s height (distance from the support to the top of the highest peak). The five most profitable stock patterns: • symmetrical triangle You’re halfway through your ChartAdvisor toolbox. But you still need a couple more nuts and bolts to ensure high-dollar profits in the market. Before you’re ready to invest, you’ll want to learn how best to cut your losses and maximize your returns. How to Minimize Your Risk There may not be a foolproof system to predicting the stock market, but we do have a foolproof system for managing risk. Chart Advisor follows one of the safest risk reduction systems available. Using these three simple steps, you can reduce the risk in your stock picking plan: Three Ways to Take Risk Out of the Stock Market 1. Screen Your Picks. This might seem obvious, but patterns that look like they are developing into predictable trends do not always follow through. After combing over thousands of stock charts a day, ChartAdvisor will often not fetures a single stock. 2. Get In. Get Out. ChartAdvisor preaches setting realistic target exit prices for all stocks. We lock in high returns while the stock is high, and we get out before the market has a chance to change its mind. 3. Set Tight Stop Losses. This step is absolutely critical to minimizing your risk in the stock market. If a sure-fire winner turns out to be a fizzled-out dud, your system needs to have a built-in, abandon-ship trigger. That is, you need to know when to cut your losses and move on to brighter prospects. ChartAdvisor sets its stop-loss trigger around 3%. So if a trade starts to go sour, you will almost never lose more than 3% of your investment. How to Maximize Your Return Remember at the beginning of this report when we said we’d show you the Three Simple Steps to Stock Profits? We already learned about step one: picking profitable stock patterns. We’ve also covered step two: minimizing your risk. Now we’ve come to the final step that makes the Chart Advisor system so unique: how to profit from stocks, even when the stock goes down. It’s a common misconception that traders can only make money when the price of a stock rises. Investors can make money anytime they can predict a stock’s future movement – up or down. It’s time to learn about short selling. Short selling is the secret to making cash in a down market. Here’s how it works: 1. Identify a stock pattern that suggests a stock is headed down. 2. Borrow shares of the soon-to-decline stock from your brokerage. Example: Let’s say, right before the Cleveland Cliffs pattern (above) breaks out and moves downwards, you borrow 100 shares of the stock. 3. Immediately sell these borrowed shares. Example: You immediately sell these borrowed shares of Cleveland Cliffs at the price just below the support line: $70 per share, 100 shares = $7,000. You are now sitting on $7,000. But, of course, you still owe the brokerage 100 shares, which you don’t currently have anymore. Example: You wait for the stock to reach the target price, which in this example, is $63 per share. 5. Buy the shares at the target price. Example: You use the $7,000 you made earlier to purchase 100 shares at $63 per share. That costs you $6,300 dollars and leaves you with an extra $700 in your account. 6. You return the shares to your brokerage. Example: Return the 100 shares of Cleveland Cliffs to your brokerage. 7. Enjoy your profits. Time to Get Started! You’re ready. You know everything you need to make big money on stocks, and you can put all of these tools to work now. Start flipping through stock charts, and see if you can identify the right patterns. Then use our easy-to-follow principles of risk management and short selling to ensure you are squeezing the most out of every one of your investment dollars. Of course, doing this yourself is a lot of work. And you could save dozens of hours a week if you left the tedious job of picking patterns to us. 4. You earn in an up or down market. Our non-biased approach to the market allows us to profit when stocks rise or fall. Employing a rigorous short-selling strategy allows our members to profit while others lose. 3. We follow an unbeatable built-in risk management system. Tight stop-loss triggers and systematically set target prices mean you get in and get out, capturing the highest dollar with the lowest risk. 2. You see results in weeks, not years. Watch your account grow in your first weeks and months with ChartAdvisor. You don’t have to wait until retirement to figure out if your buy-and-hold strategy was the right one. 1. It works. If you don’t believe us, listen to our readers … "I have been a reader for maybe a month now. I don't have a big bank roll to trade with so I trade the cheaper stocks only. In the last two weeks I have made two trades that you suggested. I have increased the money in my stock account by 30%+ in only two weeks. My only problem is I didn't have enough money to buy more stock. … I went from an account balance of $12,500 to $16,600...in a month."
And we are going to give you those tools.
A Simple Toolkit for Reliable Returns
In this simple-to-follow, eight-page guide, ChartAdvisor introduces you to five of the most powerful, profitable patterns in stocks.
2. Minimize your risk
3. Maximize your return in up and down markets
The Symmetrical Triangle: A Reliable Workhorse 
Symmetrical Triangle Pattern
To form your symmetrical triangle pattern, draw two converging trendlines that bound the high and low prices. Your trendlines should form (you guessed it) a symmetrical triangle, lying on its side.
• Price of the asset traveling between two converging trendlines.
• Breakout ¾ of the way to the apex.
For symmetrical triangles, sell your stock at a target price of:
ChartAdvisor Symmetrical Triangles in Action
• Entry price minus the pattern’s height for a downward breakout.
Ascending and Descending Triangles: The Traditional Bull and Bear
Confirm your ascending triangle pattern by drawing a horizontal line tracing the upper price barrier and a diagonal line tracing the series of ascending troughs.
Confirm your descending triangle by drawing a horizontal line tracing the lower price barrier and a diagonal line tracing the series of descending troughs.
The ascending and descending patterns indicate a stock is increasing or decreasing in demand. The stock meets a level of support or resistance (the horizontal trendline) several times before breaking out and continuing in the direction of the developing up or down pattern.
• Entry price minus the pattern’s height for a downward breakout.
Head and Shoulders: A ChartAdvisor Staple 
Head and Shoulders Pattern
Head and shoulder patterns are characterized by a large peak bordered on either side by two smaller peaks. Draw one trendline, called the neckline, connecting the bottom of the two troughs.
The first trough is a signal that buying demand is starting to weaken. Investors who believe the stock is undervalued respond with a buying frenzy, followed by a flood of selling when traders fear the stock has run too high. This decline is followed by another buying streak which fizzles out early. Finally, the stock declines to its true worth below the original price.
Triple and Double Bottoms and Tops: Reversals upon reversals 
A small peak is surrounded by two equal troughs.
• Two equal lows, not to differ by more than 3% or 4%.
A small trough is surrounded by two equal peaks.
• Two equal highs, not to differ by more than 3% or 4%.
Three equal troughs amid a series of peaks.
Triple Top Pattern
Three equal peaks amid a series of troughs.
Now You Know…
• ascending and descending triangles
• head and shoulders
• double top and double bottom
• triple top and triple bottom
No investment advisor likes to admit it, but no stock picking system is perfect. Sometimes, the stocks we think will explode, don’t. Sometimes, the stocks we feature lose money.
In Up or Down Markets
4. Wait for the stock to drop to your target price.
Top 5 Reasons to Try Visit Chart Advisor dot com Daily
5. We promise realistic results. We aren’t out to WOW you with ridiculous promises of 2000% percent gains in two months. Our system is time-proven and solid, and if followed over the long-term it has the potential to provide investors with handsome returns.
----- With due apologies and full credits to chart advisor dot com
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Saturday, 31 May 2008
FnO
Following is a list of top gainers and losers in the futures and options market in the NSE on the 30th May 2007 for the June series: Top Gainers % CHANGE SYMBOL OPEN HIGH LOW CLOSE IN O.I. AIAENG 1495 1642 1492.7 1568.75 375 NICOLASPIR 357.4 373.8 356.05 358.4 150 STERLINBIO 206.5 218.6 206.5 211.3 56.75 RANBAXY 512 538.3 511.5 530.75 55.85 BAJAJHLDNG 620 643 593.15 617.05 39.55 COLPAL 433 440.9 416.5 418.85 38.46 BHUSANSTL 842.75 924.35 842.75 913.55 35.19 M&M 612 614.9 582.6 588.3 22.52 MCDOWELL-N 1640 1709 1625 1659.25 20.97 BEL 1164 1210.35 1113.55 1161 20.77 EKC 306.2 310.5 292.3 302.4 18.37 J&KBANK 645 645 635 643.5 17.65 GLAXO 1120 1179 1120 1143 16.53 ORIENTBANK 175.65 176 167.75 168.3 16.46 AMTEKAUTO 292.2 295.5 286.15 291.05 14.63 IOB 125.5 125.5 116.1 116.9 14.07 BEML 1122 1122 1071 1084.7 13.29 SHREECEM 800.05 800.05 785 800 11.76 BAJAJ-AUTO 603.8 603.8 542 573.6 11.41 HINDPETRO 254.5 254.7 241.3 246.55 11.24 ABAN 4072 4125 3952 4012.85 10.31 STER 911.9 947.75 903.5 919.75 10.26 Top Losers % CHANGE SYMBOL OPEN HIGH LOW CLOSE IN O.I. HCC 113.5 120.8 113 119.25 -9.98 BHEL 1615 1676 1608.6 1662.9 -9.88 BANKINDIA 294 299.25 289.25 295.85 -9.35 IVRPRIME 215.95 226.9 212 224.5 -9.21 CROMPGREAV 230.25 232.8 227.25 230.9 -9.15 GAIL 393 403 390 400.6 -8.39 LT 2907.9 3046 2907.9 2977.5 -8.36 WELGUJ 378.75 394.95 378.75 391.3 -7.31 GNFC 156.9 157.9 150.3 153.25 -6.49 BATAINDIA 162.1 164.9 160.6 163.85 -6.02
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Friday, 30 May 2008
Open Interest
What Open Interest Tells Us
A contract has both a buyer and a seller, so the two market players combine to make one contract. The open-interest position that is reported each day represents the increase or decrease in the number of contracts for that day, and it is shown as a positive or negative number. An increase in open interest along with an increase in price is said to confirm an upward trend. Similarly, an increase in open interest along with a decrease in price confirms a downward trend. An increase or decrease in prices while open interest remains flat or declining may indicate a possible trend reversal.
Rules of Open Interest
Now, there are certain rules to open interest that must be understood and remembered. They have been written in many different publications, and one of them being an excellent version of these rules written by chartist Martin Pring in his book "Martin Pring on Market Momentum".
In this 2002 chart of the COMEX Gold Continuous Pit Contract, the price is rising, the open interest is falling off and the volume is diminishing. As a rule of thumb, this scenario results in a weak market.
If prices are rising and the volume and open interest are both up, the market is decidedly strong. If the prices are rising and the volume and open interest are both down, the market is weakening. Now, if prices are declining and the volume and open interest are up, the market is weak, but when prices are declining and the volume and open interest are down, the market is gaining strength.
Open interest is an indicator often used by traders to confirm trends and trend reversals for both the futures and options markets. Open interest represents the total number of open contracts on a security. This article explains the importance of the relationship between volume and open interest in confirming trends and their impending changes.
Volume
Used in conjunction with open interest, volume represents the total number of shares or contracts that have changed hands in a one-day trading session in the commodities or options market. The greater the amount of trading during a market session, the higher the trading volume. A new student to technical analysis can easily see that the volume represents a measure of intensity or pressure behind a price trend. The greater the volume the more we can expect the existing trend to continue rather than reverse.
Technicians believe that volume precedes price, which means that the loss of either upside price pressure in an uptrend or downside pressure in a downtrend will show up in the volume figures before presenting itself as a reversal in trend on the bar chart. The rules that have been set in stone for both volume and open interest are combined because of their similarity; however, having said that, there are always exceptions to the rule, and we should look at them.
General Rules for Volume and Open Interest
Let's summarize these with an easy-to-read chart:
When open interest is high at a market top and the price falls off dramatically, this scenario should be considered bearish. In other terms, this means that all of the long position holders that bought near the top of the market are now in a loss position, and their panic to sell keeps the price action under pressure.
There is no need to study a chart for this indicator since the rules are the most important area to study and remember. If you are a new technician starting to understand the basic parameters of this study, look at many different charts of gold, silver, and other commodities so you can begin to recognize the patterns that develop.
Remember it's your money - invest it wisely.
----- With due apologies and full credits to investopedia
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