Bharat Bijlee (BBL) : Consolidating

Bharat Bijlee (BBL) has been consolidating for last 3 weeks between narrow range of 2100 to 2200. Last three sessions were showing some  uptrend with slight rise in price.  It is making very interesting chart pattern for break out. However, it is not necessary that consolidation is always cause breakout towards upside. The direction of the break out is decided by the the quality of future news/result or circumstances.

BBL also shows two spikes in the chart where volume have jumped much greater than average daily trading with  , which perhaps can be assigned to inside trading, as the results date is approaching near.  MACD and RSI indicators also show clear and consistent upward trend, one can expect a good break up in the price with  good jump in the price.

Whether Indian stock market is showing bullish signs?

Everyone is toying with the question. The market seems to have arrived at cross road and most experts are hopelessly divided about the direction where the market will head, and I am not expert at any technical analysis but I too have my opinion

I recall reading somewhere (do not recall the source, please share if some knows) that historically is is seen that once market corrects it takes 91 days to begin recovery phase.

Around 10-04-2008 Nifty showed first fall and continued, with 2-3 bounce back. Intermediate bounce backs lasted for 2-3 trading days but the trend was downwards. Around 09-04-2008 recovery started which continued for 7 session, then two insignificant days of profit booking and then the trend continued upward. Perhaps, this can be sign of beginning of recovery phase and the market has swing up after showing the bottom. The market was not fettered by any negative news during while making continuous uptrend which is good sign.

If one compares the chart of previous fall of 11-05-2006, which also showed recovery around 09-08-2006 (approximate 91 days) and then the trend was continued.

RSI (Relative Strength Index) of both the charts are strikingly similar going towards 70 , and should remain around that level (in the recovery of August 2006, RSI constantly remained around 70 till first week of December’06).

MACD (Moving Average Convergence/Divergence (MACD) in both the charts are moving above 0 (turning positive) with the positive histogram. After August-2006 correction MACD line remained consistently near 65 till 08-12-06.

Only CMF (Chaikin Money Flow) indicator shows some worrying sign. During May-August’06 recovery, CMF showed consistent accumulation during previous two months (July-Aug’06) of the recovery phase. However presently CMF is not conclusive at all and indicator is withered showing confusion among the market players.

Technical analysis , however, does not consider any external factors and merely base the analysis on the chart patterns. Thus the chart pattern shows bullish sign, but one has to wait for confirmation of bull market.

However, in US according Dow theory, the market has confirmed bullish signal as both the index (Dow Jones and Transportation) have arrived at confirming the bull signals around 18-04-2008 (Read following articles for Dow bullish signal).

http://www.internetnews.com/bus-news/article.php/3741971
http://www.fool.com/investing/general/2008/04/21/thanks-a-lot-dow-theory.aspx
http://www.forbes.com/personalfinance/2008/05/01/allocation-diversification-…

Doomsday for Indian Share Market

The market has been sliding since 8th January, and today it was the biggest slide of the In the history of Indian share markets.

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Here are the 10 biggest falls in the Indian stock market history:(rediff.com)Jan 21, 2008: The Sensex saw its highest ever loss of 1,408 points at the end of the session on Monday. The Sensex recovered to close at 17,605.40 after it tumbled to the day’s low of 16,963.96, on high volatility as investors panicked following weak global cues amid fears of the US recession.

May 18, 2006: The Sensex registered a fall of 826 points (6.76 per cent) to close at 11,391, following heavy selling by FIIs, retail investors and a weakness in global markets. The Nifty crashed by 496.50 points (8.70%) points to close at 5,208.80 points.

December 17, 2007: A heavy bout of selling in the late noon deals saw the index plunge to a low of 19,177 - down 856 points from the day’s open. The Sensex finally ended with a huge loss of 769 points (3.8%) at 19,261. The NSE Nifty ended at 5,777, down 271 points.

October 18, 2007: Profit-taking in noon trades saw the index pare gains and slip into negative zone. The intensity of selling increased towards the closing bell, and the index tumbled all the way to a low of 17,771 - down 1,428 points from the day’s high. The Sensex finally ended with a hefty loss of 717 points (3.8%) at 17,998. The Nifty lost 208 points to close at 5,351.

January 18, 2008: Unabated selling in the last one hour of trade saw the index tumble to a low of 18,930 - down 786 points from the day’s high. The Sensex finally ended with a hefty loss of 687 points (3.5%) at 19,014. The index thus shed 8.7% (1,813 points) during the week. The NSE Nifty plunged 3.5% (208 points) to 5,705.

November 21, 2007: Mirroring weakness in other Asian markets, the Sensex saw relentless selling. The index tumbled to a low of 18,515 - down 766 points from the previous close. The Sensex finally ended with a loss of 678 points at 18,603. The Nifty lost 220 points to close at 5,561.

August 16, 2007: The Sensex, after languishing over 500 points lower for most of the trading sesion, slipped again towards the close to a low of 14,345. The index finally ended with a hefty loss of 643 points at 14,358.

April 02, 2007: The Sensex opened with a huge negative gap of 260 points at 12,812 following the Reserve Bank of India decision to hike the cash reserve ratio and repo rate. Unabated selling, mainly in auto and banking stocks, saw the index drift to lower levels as the day progressed. The index tumbled to a low of 12,426 before finally settling with a hefty loss of 617 points (4.7%) at 12,455.

August 01, 2007: The Sensex opened with a negative gap of 207 points at 15,344 amid weak trends in the global market and slipped deeper into the red. Unabated selling across-the-board saw the index tumble to a low of 14,911. The Sensex finally ended with a hefty loss of 615 points at 14,936. The NSE Nifty ended at 4,346, down 183 points. This is the third biggest loss in absolute terms for the index.

April 28, 1992: The Sensex registered a fall of 570 points (12.77 per cent) to close at 3,870, following the coming to light of the Harshad Mehta securities scam.
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Perhaps, this can be good buying opportunity. But , then again nobody knows where this market will end up. I have been buying scrips in small quantity but prices are falling like brick.

Ambani brothers seemed to suffered most in the single day. Today, Reliance Natural (RNRL) came down with landslide of 23% at 157. Reliance Petro (RPL) also slided 17% ending at 171. Reliance Capital also lost 20% and closed at 1884. Reliance Communication lost 12% and closed at 613. Reliance Industry (RIL), the flagship of Mukesh Ambani group, also lost 9% closed at 2540.

Many liquid shares have lost more than 25% in one week. Essar Oil lost 31% in single day. TTML has lost 40 % in 10 days , from highs of 65 now it is sitting at 40. Mercator Lines (MLL) touched 186 10 days ago and today it closed at 120 and that too because of restricted lower circuit of 5%.

Analysts and experts are also shocked as such nasty fall was unexpected, and there are many reasons to ponder why this market fall. They also expect to market fall further 10-15 % but also not pessimistic about the bull run in long term.

Log har mode pe ruk ruk ke sambhalte kyun hain,
itna darate hain to phir ghar se niklate kyon hain

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Bull story

Here is the reproduction of entire article from business-standard.com
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Mudar Patherya explains how to identify a bull market.

# It’s a bull market if you’ve woken up this morning with the feeling: “Thank god, it is Monday!”

# It’s a bull market if the analyst takes a deep breath, runs his mind quickly across 1985, 1992, 2000 and says, “But it is different this time.”

# It’s a bull market if the MD is talking to you but looking at the CNBC ticker.

# It’s a bull market if your son asks you for the meaning of ‘support’ and you confuse him with trend lines and candlesticks.

# It’s a bull market if your sense of time evolves from ‘I knew her from the time she was this small’ to ‘It was in those days when RIL was only Rs 15…’

# It’s a bull market when your broker says, “Lai liyo baapa, share jowa nahin maley!”

# It’s a bull market if you discover a sudden respect for the middle-level accountant of a publicly listed company and suffix his name with a ‘ji’.

# It’s a bull market if every analyst advises caution but adds, “However, in the long term we are bullish.”

# It’s a bull market if you’re suddenly discovered on the social circuit because you happen to be the husband of the wife who is a niece of the person who was a friend of Rakesh Jhunjhunwala’s father 30 years ago.

# It’s a bull market if people call you up to discuss the weather, the pollution, the nation, the Marxists and inevitably end up with, “Kuch khareedne laayak?”

# It’s a bull market if everyone is convinced that the country has a great future but will still call you as soon as the market melts three per cent and ask, “Badhoo baraabar, ney?”

# It’s a bull market if a Rs 10 crore profit becomes a Rs 15 crore profit quarter-on-quarter and you sneer dismissively, “Kuch ho nahin raha hai!”

# It’s a bull market if you disinvest big time but prefer to leave the surplus with the broker saying, “Aaakhir aapko hi toh mujhe dena hai.”

# It’s a bull market if you apply the ROI (return on investment) concept to everything your wife says you need at home and grumble: “Yaad hai, if we had not bought the microwave oven but bought Saboo Sodium stock, today you would have been a queen riding an Alto…”

# It’s a bull market if you see 25-year-olds trade derivatives arrogantly and come away feeling that you need to read Victor Frankl’s Man’s Search for Meaning all over again.

# It’s a bull market if you encounter a new species of professional who only works five days a week from 9.55 to 3.30 and responds to everything with ‘Jalsaa chhey!’

# It’s a bull market when housewives discover an undiscovered part of their personalities in the 90 minutes between putting the tadka on the daalm and picking pappu up from school by calling the broker and asking “Tewariji, aaj kya naya hai?”

# It’s a bull market when the Opinion Democratisation Index peaks, usually manifested in 23-year-olds dismissing companies with a 10 per cent increase in earnings as ‘chors’.

# It’s a bull market when you ask why Prism Cement will go to Rs 81 and the answer is ‘Kyonki website pey likha hain’.

# It’s a bull market if Enam puts out a research report indicating that the stock could double in a year and you say ‘Bus?’

# It’s a bull market when the management is explaining its restructuring, business model and sustainability agenda and the analyst simply wants to know ‘Lekin EPS kya aayega?’

# It’s a bull market if the wife starts getting suspicious about an sms every two minutes on your cell phone, sneaks a look when you go to the loo, only to find ‘Buy Nifty futures’.

# It’s a bull market when you get a call from someone who you thought was a proud father of an MBA graduate but insists, “Aap mere bete ko aap ke under mein le leejiye, aadmi ban jaayega!”

# It’s a bull market when people don’t have more than Rs 223 in their pocket but discuss stake sales and numbers ending six zeroes.

# It’s a bull market when you find it difficult to go on a vacation because somewhere deep inside you nurse the feeling that an unattended market might do something stupid behind your back.

# It’s a bull market when Nandigram seems a ‘jhanjhat’ and Myanmar monks irrelevant.

# It’s a bull market when a company with a turnover of Rs 1300 crore announces an expansion of Rs 16,000 crore, issues a statement, cuts ribbons and is photographed alongside the CM and all the hard work being put in by some outstanding business leaders suddenly looks like poultry raw material.

# It’s a bull market when you read the front page of the pink papers and realise how small you are.

# It’s a bull market if your daughter mentions ‘Let us take a break’ and your first recall is interrupted hours of trading due to the sun outage.

# It’s a bull market when you get irritable on Saturday and Sunday.

# It’s a bull market when you read a column like this and say, “What? No tip?” and hiss that your time was bloody wasted.

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Market takes a breath

After the marathon of 15 days no one was surprised to see the today’s halt. Today only trigger was expected from Reliance Industry about split or bonus (quite far fetched expectation, of course) and got none except making RIL as first MNC of India. Rupee keep appreciated making the IT pack duller. So there was profit booking everywhere. The Finance Minister was also worried about the speedy rise of the market.

However, FII do not appear to be worried by the Indian politics but appear to be interested to hold and invest more in Indian markets largely in infrastructure , telecom as there is huge potentials are still untapped and banking sector as it is very less involved and less effected to sub-prime exposure.

I sense that market will open on positive note on Monday and will recoup the loss made today.

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Accumulating Tata Teleservices (Mahrahstra) Ltd. (TTML)

I have been tipped about Tata Teleservices (Maharshtra) Ltd., (TTML) a year back when it was ranging between Rs.17 to 20. The major reason for such low price of a Tata share was that the company was consistently in loss. Therefore, I did not take much interest in the script.

However, with the result of every quarter the loss started diminishing and price was picked up relatively and quitely. In the recent euphoria a news came that the company will show profit for first time during the quarter ending on Sep’07 and price reached to Rs.45-00 making TTML a classic turnaround story.

Now, like most of other investors I too felt missed out the TTML rally and decided to purchase some shares at a given dip. A single day opportunity was provided on 05-10-2007 when with the market crash the share price reached between 36 to 38 and I have purchased it in small quantity. Then today it reached to Rs. 42-00 and closed at some Rs.40-75. I will accumulate some more upto Rs.45-00.

Considering the face value of Rs.10-00 it seems cheaper than other telecommunication companies, particularly with Spice Communication which is also an loss making company. Further,some mutual funds also have shown some interest and purchases have been made between the price range of Rs. 31-00 to 43-00 , which is also encouraging sign.

Sometime back the board had recommended 10% , Re.1-00 , dividend but it seems that the recommendation has not been approved in the Annual General Meeting. But the prospective of dividend seems good and even at the price of Rs.40-00 it gives 2.5% yield.

Rumors in the streets are that the price will be near 200-00 within next 12-18 months. However, I still maintain my target for 20% annual return on the amount invested.

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Fun ride for Indian Stock Market

Diwali is yet a month away and Indian investors have been celebrating every day since 18-09-2007. On 26-07-2007 the sensex touched life time high of 15868 and started sliding due the global concerns of the sub-prime issue of US. The negative sentiment brought the sensex to the low of 13779 on 17-08-2007. Thereafter the market showed some healthy moves but required some thing to merry about.

Announcement on 18-09-2007 of the Fed Reserve was eagerly awaited as reduction in the landing rate was anticipated. The news came as expected and the Indian stock market showed buoyancy and on 19-09-2007 opened up with positive gap , above the previous life time high and closed at 16322 with net gain of 653 marks from the previous close of 15669.

What has happened thereafter is the record in the history of Indian stock market. For next 12 days, everyday the market made new high and analysts and experts cautioned about a correction but the market did not show any sign of correction. However, the weak trading session on 5-10-2007 and next day’s volatility of 579 points and negative close of 17491, appeared to be the sign of the end of the party. But the biggest surprise was yet to be unveiled on the next day.

Today (09-10-2007) morning the markets started sluggish without any sign of improvement and within few minutes the sensex reached to 17287. But thereafter it has showed such movement which nobody had anticipated. Most analysts and experts were talking about short positions and correction but the announcement from the political front vanished all the nervousness of the market and the market moved without any sign of doubt and crossed 18000 mark and closed at 18280 , making historical nearly 1000 points upward movement and net gain of 788 points.

Sensex: Road to 18 K 9-10K: 49 days 10-11K:30 days 11-12K: 20 days 12-13K: 136 days 13-14K: 27 days 14-15K: 144 days 15-16k: 53 days 16k-17k: 6 days 17k-18k: 8 days

Sensex Chronology 18,000- October 9, 2007 17,000 - Sep 26, 2007 16, 000 - Sep 19, 2007 15,000 - July 6, 2007 14,000 - Dec 5, 2006 13,000 - Oct 30, 2006 12,000 - Apr 20, 2006 11,000 - Mar 21, 2006 10,000 - Feb 6, 2006 9,000 - Nov 28, 2005 8,000 - Sep 8, 2005 7,000 - June 20t, 2005 6,000 - Feb 11, 2000 5,000 - Oct 8, 1999

The sensex has gained 2340 points or 14.5% since 19-09-2007 and has performed better than most of global markets. Dow Jones Industrial Index touched lifetime highs of 14000 marks on 19-07-2007 and fall low mark of 12845 and in spite of all the good news coming form US itself, it has not been able to gain as fast as its Indian counterparts.

The stock market is largely based on sentiments and is full of sentimental people. On 20-09-2007 when the sensex was near 16300 somebody predicted about reaching 20,000 marks by early ‘08, which seemed unlikely, now it doesn’t. Now someone is predicting that sensex will reach to 40,000 marks, what do you say?

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Reliance Petro(RPL) : High returns

Last year when I started accumulating Reliance Petro (RPL), I wrote about my expected returns. I was expecting 20 to 30% annual growth but ,pleasantly, my expectation fall short compared to the bullish run of RPL. From June’06 to mid March’07 RPL was bouncing between the narrow range of 68-72. On 23-03-2007 it broke the upper limit to Rs.75-00 and thereafter it has not looked back. Withing three months, in June’07, it reached the psychological upper limit of Rs.100-00 and it was tempting to sell some of holdings as it was giving handsome returns of about 50% on my average purchase. Eventually my greed ruled over the decision to partial profit booking.

Again, I waited watching RPL to climb point by point and consolidating well between 105-115 before it reached to 120-00. I was comforted about my decision to hold as RPL did not give any good opportunity to buy at lower price. (However it reached to 96 level, but considering the commissions, other charges and capital gains there was no room for any profit).

RPL showed another positive sign during the recent sub-prime triggered crash, that it did not go below 105-00 , that is too for once or twice and showed upsurge as soon as the market was out of the panic making new highs. From the first trading day of September’07 it started moving from 116-00 and the close on 20th September was 138. However on next day , 21-09-2007 it opened at 139-00 and went to the high of 158-00 closing at 155-00 providing some 130% of annual returns.

RPL has special place in my portfolio, as 25% of funds are allocated to it and therefore change of Rs.2-00 gives 2% of return on entire portfolio. Some may think that I am over invested in the particular script, yes I am, but thankfully my gamble turned out to be safe.

Now about the future prospects , everybody has wild guesses about it. However, some expert recommends to book some profit now. But I plan to hold it more and my first sell probably will take place soon before the production starts in the end of 2008 ,if nothing extraordinary happens in between.

Some people worry about the merger of RPL with Reliance Industry (RIL). However in my view there is not much to worry as in case of the merger still the management remains same.

My guess is that RPL will move upwards till the production date, as people are buying with high expectations of splendid earnings. So until the production does not start the expectations will fuel the price and as there will be hardly anything to effect the price , except the announcements about how soon the refinery will start. But after the production a factual picture will emerge and earnings and profit will effect the price growth.

Looking to the pace , I believe the price will reach to 250-00 if not more, by Dec’08 , or earlier of the production commence earlier than that. If it reaches , somehow, to 300-00 I will sell 20% stake to encash my original investment.
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Reliance Money : What is the catch?

Money has been the probably most despised and yet most desired thing during all the ages everywhere. In India the name of Reliance is capable to invoke the set of such emotions. Among investors and traders ‘Reliance’ is equivalent to growth. Therefore, the combination of Reliance and Money has to be delighting or devastating , depending upon which side of the table you are sitting.

Recently I have begun to take interest in Future and Options but after some informations and calculations I found that I would be paying handsome commission to my broker irrespective of my returns.

Then someone suggested me to do online trading through Reliance Money and told about the brokerage and other charges charged by Reliance Money. It was hard to believe when I looked at the brokerage percentages they charge.

Reliance Money charges prepaid, fixed Rs. 500-00 for the turnover of Rs.10 millions (1 crore) in which it allows turnover of trade Future/Options upto 9 million and delivery upto Rs.1 million. Therefore brokerage charges are as low as Rs.0.05 for Rs.10,000-00.

Most brokers charge for delivery is anywhere between 0.25 % to 0.75 % , so brokerage for the delivery of stocks worth Rs. 10,00,000-00 would be between Rs. 2500-00 to 7500-00. In Future trading, brokerage is between 0.02% to 0.05% and turnover of Rs. 90,00,000-00 would cost between Rs.18000-00 to Rs.45,000-00. Further , one has to pay 12% Service Tax on the brokerage amount.

So, Brokerage charges for a 90m(FnO)+ 10m(delivery) would between Rs.20,000-00 to 52,000-00 and with additional 12% service tax on the amount. Whereas Reliance money offer all these for Rs. 500-00. Cleverly,RM shows commission of 1 paisa for every trade , irrespective of the amount of a trade, so no service tax is to be borne. For the active traders , for Rs.2,500-00 turnover is allowed upto the extent of Rs. 60 million

While registration one has to pay Rs.750-00 as one time fees and that includes the opening of of demat account with Reliance Money, which can be maintained annually for Rs.50-00.Reliance Money also offers IPO, Mutual Fund, Commodities, Forex etc., once you open the account.

Mainly due to the lucrative hyper-low brokerage charges, Reliance Money has attracted lots of interest and making difficult for other brokerage house to stay in the game. It is wondering how Reliance Money is able to sustain in the market with such puny commissions. However, one thing is notably different from other brokerage house, that Reliance Money requires cash to be deposited for margin money, while most others accept stock in the place of cash margin. Probably by using the cash money deposited by the account holders RM is able to stay afloat.

In my case I will be depositing Rs.10,000-00 as the margin money as at this time I am not venturing into Future/options trading, partly because I am not prepared for the trade, and partly I have never traded online. So initially I will be experimenting with the online trading doing intra day trading as I will not be able to take delivery more than the amount I have deposited.

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Interest Rate cut by Fed Reserve : Wonders or worries

Everyone was watching closely the Fed Reserve , the Central bank of US, to take decision on the lending interest rate to other banks. Pleasantly, for market traders, the Fed reduced the interest rate from 5.25 % to 4.75% and Dow Jones reflected the decision by closing some 2.51% higher than the previous close and other Asian markets followed the trend.

However, the question still remains whether the interest cut is appropriate to remedy the sub-prime fever in US. Wikipedia explains ” Sub-prime lending is the practice of making loans to borrowers who do not qualify for the best market interest rates because of their deficient credit history”.

Many major banks of US , Europe and Asia were directly or indirectly involved in sub-prime and suffered heavily. The present interest rate reduction is to help the banks to obtain money from the central bank at lower rates.

Most of bankers has appreciated the cut. But there are still some concerns about the cut. Read the article by Ajit Dayal explaining the sub-prime issue. In the next article he is concerned about the interest cut.

Can any central bank allow its larger banks to fail or be in trouble? Well, under Paul Volcker, the Fed Chairman in 1980 it was possible.

Citibank nearly sank and its stock price was US$ 1 and priced for bankruptcy before the famous Saudi investor (Prince Alwaleed bin Talal) rescued it. But Paul Volcker was a bartender from the days of the black and white movies. Like our own V P Singh, he did not care for the might or reputation of anyone. If you made some silly financial bets and you were wrong, Mr Volcker let you suffer for it. When the US was going through a housing boom in 1980, Mr Volcker did what all central banks should do - he cut that boom to size by raising interest rates to 21% (yes, 21%) in USA. That killed the demand for housing, hurt the US economy big time, killed any inflationary pressures but probably laid the ground for the next, largest and most sustainable expansion in the US economy. By raising interest rates, banks went bust, home building companies went bust, Wall Street was dead. Mr Volcker kept on chewing his cigar and kept on throwing the drunks out of the bar.

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