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Posts Tagged ‘CIPLA Stock’

What is the “reason” behind the market moves?

Friday, September 21, 2007 7 comments

Today the biggest question on everybody’s mind is “why are all Reliance stocks moving up” but all I feel you should be bothered about is ‘Have you made money riding these stocks?”

I see people cooking up all kinds of “stories” to justify the move. Some say it is a scam while others say that Ambani brothers have joined hands again!(How intelligent?)

This is similar to what fundamental analysts do- find a reason and then issue a buy or sell. People find it easy to follow because it is ‘logical”(so smart!). Markets do the opposite of this- they first move and then comes the “why of it”. And sometimes the “why’ doesn’t even exist šŸ™‚
Lets ask ourselves what might happen if the same Reliance stocks stage a strong reversal on Monday.The same guys will say that “the stocks were too expensive, so they had to correct” .The technical analyst shall say that “all of them were in overbought zone” so they had to fall.(Once again-how intelligent ?)

Reasons don’t make you the money.In hindsight I can justify almost “anything” and “everything”. I am surprised by the confidence such people have. Let me give you an example.

A few days back Mr. Nirmal Jain of Indiainfoline was ‘absolutely bearish” on the markets and saw that bearishness lasting for 6-9 months. (How accurate?) Today he again comes on TV and says that markets are going to “stay bullish’ for coming quarters. Earlier the ‘reasons’ for bearishness were “subprime problems” and today the reasons for “bullishness” are “India’s secular growth”!

(When markets were falling in August,I remember writing on the blog that one thing is “positive” in these falling markets- all the experts have become bearish! And incidentally markets bottomed out the same day itself (August 22).Read what I had written.)

Now check any of my previous recommendations. Do I ever ask you to buy because of ‘some news” or “inside information”?

Many of you might not have bought Reliance Capital at 1040 thinking that I didn’t give you a “strong reason’ to buy it. And also the stock was already “too high” or ” too expensive”.Now you can’t buy at 1550 because what was high and expensive at 1040 is definitely more expensive and higher at 1550!!

Please read my post-Infosys-a fundamentalist view to get a better understanding of what I am saying.

Similarly many people got annoyed when I gave a short sell call on Cipla when it was at 200. Three months later Cipla is(-15%) and whereas a RPL is (+50%). Now if you were buying CIPLA because it has already “fallen too much” or that it is a “fundamentally good company”, then you can continue to add it at lower levels till you get your “cost price”.

Coming back to markets-I am looking forward to the next week with extreme focus and caution. As many of my clients are sitting on decent profits, all I am asking them is to manage their risk and ride their profits.It is important to note that this is the time when most of the money shall be made or lost in the short term. So fasten your seat belts and enjoy the action. At the same time “remain in control”.

Good luck with your Reliance stocks!

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What is the "reason" behind the market moves?

Friday, September 21, 2007 7 comments

Today the biggest question on everybody’s mind is “why are all Reliance stocks moving up” but all I feel you should be bothered about is ‘Have you made money riding these stocks?”

I see people cooking up all kinds of “stories” to justify the move. Some say it is a scam while others say that Ambani brothers have joined hands again!(How intelligent?)

This is similar to what fundamental analysts do- find a reason and then issue a buy or sell. People find it easy to follow because it is ‘logical”(so smart!). Markets do the opposite of this- they first move and then comes the “why of it”. And sometimes the “why’ doesn’t even exist šŸ™‚
Lets ask ourselves what might happen if the same Reliance stocks stage a strong reversal on Monday.The same guys will say that “the stocks were too expensive, so they had to correct” .The technical analyst shall say that “all of them were in overbought zone” so they had to fall.(Once again-how intelligent ?)

Reasons don’t make you the money.In hindsight I can justify almost “anything” and “everything”. I am surprised by the confidence such people have. Let me give you an example.

A few days back Mr. Nirmal Jain of Indiainfoline was ‘absolutely bearish” on the markets and saw that bearishness lasting for 6-9 months. (How accurate?) Today he again comes on TV and says that markets are going to “stay bullish’ for coming quarters. Earlier the ‘reasons’ for bearishness were “subprime problems” and today the reasons for “bullishness” are “India’s secular growth”!

(When markets were falling in August,I remember writing on the blog that one thing is “positive” in these falling markets- all the experts have become bearish! And incidentally markets bottomed out the same day itself (August 22).Read what I had written.)

Now check any of my previous recommendations. Do I ever ask you to buy because of ‘some news” or “inside information”?

Many of you might not have bought Reliance Capital at 1040 thinking that I didn’t give you a “strong reason’ to buy it. And also the stock was already “too high” or ” too expensive”.Now you can’t buy at 1550 because what was high and expensive at 1040 is definitely more expensive and higher at 1550!!

Please read my post-Infosys-a fundamentalist view to get a better understanding of what I am saying.

Similarly many people got annoyed when I gave a short sell call on Cipla when it was at 200. Three months later Cipla is(-15%) and whereas a RPL is (+50%). Now if you were buying CIPLA because it has already “fallen too much” or that it is a “fundamentally good company”, then you can continue to add it at lower levels till you get your “cost price”.

Coming back to markets-I am looking forward to the next week with extreme focus and caution. As many of my clients are sitting on decent profits, all I am asking them is to manage their risk and ride their profits.It is important to note that this is the time when most of the money shall be made or lost in the short term. So fasten your seat belts and enjoy the action. At the same time “remain in control”.

Good luck with your Reliance stocks!

Markets- Volatility is the only constant!

Tuesday, August 7, 2007 Leave a comment

Volatility seems to be the current “theme”. One day up and the next day down. As the magnitude of upward movement is less than the magnitude of downward movement,net net it is drifting down.

On NIFTY watch for 4400, 4430 and 4455 levels. These are strong resistance levels.

Individual stock continue to shine. SBI a stock which has been trending up nicely is a star .SBI, Kotak Mahindra Bank and Karur Vysya Bank remain core banking stocks in the portfolios. UTI is consolidating beween 600-650 levels, so it is on the scanner. Infact it might not be a bad idea to go short on ICICI and long on SBI (a pair trade)

And watch PUNJ LLOYD, you might not want to miss this beauty. I had mentioned this stock last week.Today it is finally breaking out. This stock can be a likely outperformer. As a disclosure, I hold the stock in my personal and client portfolios.

Yesterday was also a time to nibble a few favourites like ABB around 1060 levels ,Reliance around 1750 levels and RCOM around 525 levels. Bharti is next on radar.These are strong supports ,so it was not a bad idea to accumulate.No aggressive buys though.

At the same time the short sells on NIFTY,CIPLA, Tata Motors and Infosys are providing a good enough hedge for the downside. I am personally advising people to stay away from short term trading and stay in cash.Risk management shall be the key to your long term success.

As I have said before, play like a Dravid and not Dhoni. The playing conditions are difficult. Don’t get too adventurous.

Countertrend Ideas-Short term

Thursday, August 2, 2007 2 comments

Long:

Infosys has a strong support around 1900. You can play for bounce around these levels.

ICICI bank around 890.

TCS around 1100.

RCOM around 530 .

For short:

Maruti around 860

CIPLA around 191-192

Play with tight stop losses. Markets continue to to be volatile. You might not want to be “brave” and burn your fingers.When in doubt, stay “out”!