May 24, 2015

25th May and ahead - Nifty View

We have the May expiry in the coming week and the RBI policy meeting the next week. The action is expected to be in the banking and infra stocks due to this event. Let's look at the charts of the indices.

Nifty Daily Chart
Nifty is trading in a down channel with the upper range at 8570 levels. This is an indication of a medium term downtrend. A break out from this channel will produce the next leg of a rally which could take the index above 9000 levels. A failure to break this channel or sustain a breakout could see the index re-test 8000 levels.

Nifty Fibonacci Levels
The short term Fibonacci levels show that the current upmove could face resistance at the 61.8% retracement levels at 8523 zone. We will have to look at the price action happening in this area as the week unfolds.

The current upmove could see 50 points more before facing it's resistance levels. The short term supports exist at 8380 levels which is an intraday support level. A close below 8380 levels could see the index fall to 8280 levels. On the upside, expect 8570 levels above 8525. A close above 8525 would mean more bullishness for the index.

So the levels for this week are:
Bulls Territory above 8570
Bears Territory below 8380

May 20, 2015

21st May, 2015 - Nifty View

Nifty Spot - Daily Chart
Nifty is in a medium term downtrend and we cannot rule out the current upmove from 8000 to 8432 levels as a pull back. Resistance is at 8520 and above that at 8680 levels. Support is at 8340 levels. On a break above 8520, we could see a 150 point upmove. On declines, the index could find support at 8350 levels. Today's closing should be above 8427 levels to indicate further bullishness. If the index closes below 8427 today then we could see downside start again.

Disclaimer - These views are meant for sharing with the general public at large. Please trade at your own discretion.

March 24, 2015

Indian Investor - 4 Must read books

What do the most successful investors like Benjamin Graham, Warren Buffet, etc have for us? WISDOM. The art of stock picking needs some skills, traits, etc which either you can be born with or you must work hard to acquire them. Reading investment books is a great way to learn the trade from the masters. With 1000's of books available, you really need to get your hands on the best ones to get a good return on the money you invest on these books.

Investors and traders keep asking us for "ideas" but are reluctant to do their homework. They don't want to invest time in reading books. Once you buy a stock, you have invested your money in the business, the management  and the factors that influence them. Your stock picks need a solid reason when someone questions you on the reason you bought a particular stock.

Here is a list of the MUST READ books for every investor. These book are more than enough to start of with:

The Warren Buffet Way



Warren Buffet is widely considered as one of the most successful investors of all times. The "Oracle of Omaha" has come a long way from selling chewing gum and coca cola in his neighborhood to becoming the richest man in the world by investing. The Warren Buffet way gives the readers an insight into the innovative investment strategies and which made the CEO of Berkshire Hathaway a Guru for investors world wide.

Academic learning will never teach you how to make money. As Warren Buffet says, you need the right heroes to become successful. This book gives you an in-depth knowledge about his investment theories which can help you with stock picking when applied in our Indian markets. What business to buy, which companies or sectors to avoid, these are questions which trouble every Indian investor. A book like The Warren Buffet Way shows you how Warren Buffet does it.

You can buy this book on Amazon or Flipkart.


The Intelligent Investor




Warren Buffet considers this book to be THE BEST BOOK written on investing. Chapters 8 and 20 have been the foundations of of his investment style since he started. Benjamin Graham is the one Warren Buffet looks upto. A MUST READ book for every investor. The Intelligent Investor which was written decades ago is still relevant in today's markets. Investors always fear when the market falls and get greedy when the markets start rising. How to get over this psychology? What is the write price to pay for a share? How much margin of safety does the current price offer? These are some of the questions that will definitely be answered after you read this book.

You can buy this book on  Amazon and Flipkart


One up on Wall Street



Peter Lynch is one of America's most successful fund managers who says that everyone can become an expert in stock picking. He says that just by observing businesses progress and the economic environment around us, we can find multibaggers before experts do! He gives a set of instructions to follow while reading financial statements and separate the wheat from the chaff. The Indian investor will definitely find it useful in today's ever changing environment.

You can buy this book on Amazon and Flipkart


Security Analysis


Another Benjamin Graham book finds it's way in our must read list! First published in 1934, this has been rated as the MOST INFLUENTIAL FINANCIAL BOOK ever written. Benjamin Graham came to be known as the Father of value investing after this book. Apart from his techniques, the book also features insights of some of Wall Street's leading money managers.

You can buy this book on Amazon and Flipkart

To start of with. These books are more than enough! Spend the coming months reading these classics and you will feel your maturity level increase and your outlook towards investing change.

February 01, 2015

Chaman Lal Setia Exports - Time for P/E expansion?


The company is in the business of Basmati rice under the brand name MAHARANI and is in business since 1973.

Highlights:
- Sales have grown from Rs 166 Crores in FY 10-11 to Rs 416 Crores in FY 13-14
- Net Profit in the same period has grown from Rs 6 Crores to Rs 18 Crores
- EPS has grown from 6 to 19 in the same period
- Company has been maintaining a regular dividend payout
- The company has a debt of Rs 61 Crores and reserves of Rs 57 Crores
- ROE has been consistently above 25% since the last 5 years
- Promoter holding stands at 74.39%

- Rice industry is expected to grow at 15% annually for coming years

Valuation:

- Currently trading at 74 levels
- The company is trading at a P/E of 3.5
- The dividend yield is 2.3%
- Price to BV ratio is 0.96

- With sales of Rs 416 Crores, the company is available at a market cap of Rs 72 Crores

Concerns:
- Operating margin and Net Profit margin are at 7% and 4.3% respectively.
-  Sector heavily dependent on monsoons and other climatic conditions.
- Debt has been increasing consistently though it is still within a decent ratio when compared to reserves and of the total debt Rs 17.22 Crores is from 3 non executive directors

The stock has seen some accumulation in the recent weeks and in the current market condition it is fairly undervalued. Being a cyclical, one cannot really assign a high P/E to this stock especially as the margins are pretty low. But assigning a P/E of 6 and EPS of 20 for the current year, one can expect levels of 120 in this stock which is approximately a healthy 60% return in this stock in the coming months. Also, the M-cap to sales ratio is quite low. The stock has seen a rise in EPS and the same has driven the stock price higher for the past few months. Rising EPS paired with a little expansion in P/E could drive the stock price higher in coming times. Invest as per your risk capacity and better to allocate only a small portion of your capital in this counter. This is a bull market investment.

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