Check out how Kotak bank is zooming today. Do you remember the day it was at 580-590 when we first talked about it on the blog in top 5 banking stocks?
One nice winner like this can take care of many small losers. So go for big winners rather than for those 2-3% types winners!
We continue to ride many such winners.
One of our previous stock ideas-UTV software is trending up nicely and closed at 800. Keep an eye on the stock as it can trend up higher from these levels.
Although I am also hearing some news of Disney taking a stake at 1250 but that was not our reason for entry into the stock.
Yesterday’s market action was very volatile because of the way November series panned out. Some were rolling over their losing positions while others were booking profits in stocks that had gone up considerably.I personally didn’t expect such volatility but now one needs to live with this high dose of volatility.
Yesterday’s market action was not encouraging for the bulls.Despite all the global positives, if you end up flat to negative-then its not a good sign. We need to closely watch the market action today because today there is no pressure to buy and sell in the derivatives segment.
Large caps are showing no momentum at all. Every rise is met with selling by the market participants. FIIs in particular have been on a selling spree and that trend has not reversed. Domestic players ca absorb that supply but it might be difficult for them to take this market higher. Also as most of the domestic player talk of “value”, they might just buy the dips rather than buy “momentum”.
I am focussing my attention to stocks in small cap and mid cap domain because you can still find some good stuff there. These stocks might have less correlation with the overall market trend.If the markets remain sideways, this category can outperform in the short term. At the same time, any sharp correction shall take down the whole universe of stocks with it.
May be this is just a time to preserve tons of money made in the last few months rather than get very adventurous. Looks like this is what FIIs are doing!
US markets continued their upward rally with Dow rising 330 points on hopes of 25 basis point cut in the Dec 11 meeting. The Fed is left with no option but to improve the credit markets and arrest the crash in US housing market. So what does it mean?
It means more dollar outflows, a more weak dollar and may be some strong inflows into emerging markets. Tell me why would you be in dollar assets if you are an international investor? Even if US stock markets gains but dollar falls, you gain nothing.
The only saving grace for US economy has been the robust spending by the US consumer. Till he continues to spend US might avoid a full blown recession. At the same time, they have to face the consequences of job losses and falling housing prices.
Fed will do it best to save US but I feel they might just be “behind the curve”. I’d rate our own RBI policy makers as much superior who stay ahead of the curve and prevent bubbles. Kudos to Mr. Reddy!
The markets are trading sideways and are consolidating nicely. As a trader one needs to be patient and conserve his capital during these times. Taking directional bets is very difficult. This market will test our patience.
One interesting development has been the announcement of SEBI to probe deals in RPL and Bhushan Steel. I do not quite understand the motive behind it. A probe should have been started when the stocks went up so sharply and then cracked. This might just be a face saving measure. I have not seen such probes yielding anything. Things are very difficult to prove!
RPL still continues to languish and the people need to cut their losing positions and bail out of the stock. Till that happens, the stock might continue to fall further.
JP Associates-one of our earlier stock ideas is one of the stock that is moving up nicely. This is the beauty of such stocks. No price is too high for them!
XL Telecom is now trading close to 400 levels and is soon entering the doubler category from the 50% level. I am busy finding such doublers and delivering them to the clients.
Whenever I ask people about their investment objectives, they feel confused.
Do you really know “Why are you investing in the markets”? I know all of us want to make a quick buck in the markets but how much do we want and what is it for?
Have you ever given thought to these questions?
Without having defined objectives and goals, investing can be very dangerous. How would you know that you have adopted the right strategy? How would you know that you are making a good progress and on your way to achieving your aims? Taking a systematic and planned approach to your investments is the first step in achieving financial success.
We can look at some of the possible objectives for investing and some of the approaches we can take to achieve our goals.
Investing for your kid’s education or for your retirement:
Are you one of those wish to invest in equities for long term so as to finance your kid’s education abroad or to have enough money in hand at the time of retirement?
If yes, then why do you have to take excessive risk in doing short term trading with futures? Don’t you know that you can even lose your capital if you are not careful?Don’t you understand the power of compounding? Are you aware of the fact that if you grow 5 lakhs at 35% per annum for 10 years, then your 5 lakhs grows to 1 crore. No wonder Einstein had called “compounding” as the eight wonder of the world!What you might require is a slow and steady growth of your investments every year. You are better off thinking about the next 10-15 years rather than the next 10 days!
And the earlier you start in life-the sooner you can think of being financially free.
Investing to buy your favourite car or take your dream vacation:
If you are investing to buy your favourite car next year, then you might do well to exactly find out the money you require to buy that dream car or take that dream vacation. Do you need to make 30% or 50% or 100% in the next year? This way you can define your risk in the markets and the rewards you are seeking. After that you need to put some hard work to achieve your objectives.This might also call for some short term sacrifices as you might reduce your unnecessary spending in the short term and invest that money into the markets.
Also one should keep in mind that it is not advisable to take a huge debt to invest in the markets. I have come across people who take these credit card loans to invest in the markets. For such guys it is better “not to invest”.Greed won’t help you achieve your objectives.
If you just enter the markets without even knowing what you want from them, you might be in for some big time trouble. You might just be moving like a pendulum between long term and short term investments without knowing a clear direction. View them as vehicles to create wealth and not as vehicles for some “short term excitement”.
All of us understand that “investment objectives” change with time and circumstances but we can always make those adjustments if we know what we are in for.
So write your financial goals and take the necessary steps to achieve those goals. Follow your dreams!
Check how one of our previous ideas Bhushan Steel is flaring up today-up like 40% in a single day!
Read this story to understand how mutual funds are hugely under performing the sensex. Sensex has created 5 times more wealth than the MFs. I feel that this shall trend shall continue as “buy and hold” strategies on some stocks might no longer work. Do you know that Infosys was one of most over owned stock in MF portfolios?
Mutual funds have long stopped innovating because they were getting easy money into the funds. This is good for guys like us who are individual investors and have more flexibility.
XL Telecom is a nice little stock which has been trending up nicely. We had spotted this beauty last month at around 210 levels and it continues to surprise us on the upside. Many clients have made already made 50%+ on the stock.
As I have been saying, you need to pick such stocks to make good money in this bull market.
Check the chart below:
In Indian markets,the bulls always manage to claw back in the end. So today also, the bulls managed to asset themselves after being on the back foot for most of the session. The closing was well above the 5470 levels and this might put a little doubt in the minds of the bears.
What is this market action telling us? It tells us that this market is still “long term bullish”. It also tells us that chasing performance in hot stocks might not be the best way to approach these markets. Also one needs to be mentally prepared for lot of volatility on the portfolios. It might be normal for stocks to go up 40-50% and then give back 10-20% in a quick time.
This is a good time to churn your portfolio and approach your investments in a more “systematic way”. Just doing “random” trades won’t lead you anywhere. So think about the annualized returns which you want from your investments in next 3 years and then plan accordingly. I am still finding many stocks which continue to do exceedingly well without hogging much limelight in the media. The journey onwards might be “stock specific”, so one needs to work even harder to be in the right stocks.
Short term trading has become extremely difficult and challenging. Those who don’t know “how to take losses” or live on a dose of “hope” are better off in avoiding short term trading on high leverage.The markets shall throw out such participants from time to time.
As US markets are closed on the eve of holiday, local guys might have a bigger role to play for next 1-2 sessions. I would be closely watching SBI,Reliance Capital and GMR infrastructure in the coming trading sessions.
Its next to impossible to take a call on NIFTY till this volatility persists. Till NIFTY gets back above 5700 levels, people might be reluctant to build aggressive longs again.
We expected a drift to 5600 but it was a fall from the cliff to sub 5600 levels. Infact, in a note to my clients two days back I had warned off a steep correction on the US indices seeing the technicals on Dow. Our worst fears have come true and now US markets seem to be headed for some more downside in the medium term.
Our own markets which were showing a lot of resilience finally caved in and broke all barriers on the downside. A lot of it had to do with excessive F&O positions on the stock futures side. I had warned the readers of these excesses in my previous post.
What is disturbing is that when you look at investor portfolios-all you find is RPL,RNRL,IFCI and JP Hydros of the world ! While RPL might be a decent long term bet on oil, the rest are more or less medium term trading bets. People might have made tons of money on these but as and when these things reverse, you end up facing huge losses also. People have abandoned Reliance and L&T and took to Essar Oil and Hotel Leelas of the world. So those went for 100% per week gain may now have to prepare for a similar loss. The more volatile stocks you choose in your portfolio, the more volatile returns you are going to have.
I don’t rule out a short term carnage . Those who are in cash might have a wonderful opportunity to pick up the pieces.This doesn’t end the long term uptrend but things look ugly in the medium term.5470 on NIFTY is the last hope for the bulls and they are already extending a white flag!
Yesterday closing was not encouraging and markets now carry a downward bias in the short term. Large caps are looking listless and are not showing any momentum. As a result a downward drift to 5600 in the short term looks likely. One can slowly accumulate stocks on this correction but I’d be wary of big ticket buys! Also, it might not be a good idea to buy “hot” stocks on sharp corrections.
We need to closely watch how FII selling gets absorbed by the domestic guys. If global troubles persist, global guys might want to book their profits in emerging markets and keep some cash handy.
Religare is listing today and might be a “big bang” listing. Once can play it similar to how we played Power Grid.
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