PORTFOLIO ANALYSIS - SAMPLE 8 (Jalal Basha)

Here we have a very unique portfolio of Mr Jalal Basha which comprises of some rare gems and is also well diversified. I hope it will serve some of you to select a few scrips from the portfolio to add to your own. Lets begin the analysis then.

3iinfotech
Holding 250 shares @ Rs 88.5. Closing price on 29 Sep 09 was 83.25

6 mnth tgt- 135, 1 yr tgt- 172

You should plan to exit the scrip with no profit no loss. You should re- enter the scrip at 70 and keep accumulating till level of 60.

Alembic Ltd

Holding 250 shares @ Rs 49 . Closing price on 29 Sep 09 was 52.3

6 mnth tgt- 72, 1 yr tgt- 100

Alembic can run up to 65 so keep holding till at least 62. Exit there and be ready to pick up the scrip again between 45 and 50. You can than look forward to sell your holdings at one year's target of 100.

Apollo Tyres

Holding 100 shares @ Rs 39.5 . Closing price on 29 Sep 09 was 46.2

6 mnth tgt- 55, 1 yr tgt- 85

Book your profit in Apollo Tyres at current market price. Wait for correction and buy it again at 30 level for 1 year's target.

Crompton Greaves

Holding 15 shares @ Rs 300. Closing price on 29 Sep 09 was 311.7

6 mnth tgt- 440, 1 yr tgt- 560

Play safe and exit your position from Crompton Greaves at current market price. Close below 300 will be disastrous for the scrip. It can find support at 260 level but at that point if market shows consistent weakness it may even revisit 180 level. So its better not to take any chance since you are still not in loss by exiting at CMP. You can start buying from 220 till 180 and then hold the scrip for one year's target of 560.

Ess Dee Aluminium

Holding 60 shares @ Rs 359 . Closing price on 29 Sep 09 was 352.8

6 mnth tgt-550 , 1 yr tgt- 700

Ess Dee Aluminium can touch 385 in current run-up or even higher. But on the flip side it may even drop down to 250 during market correction. But if you are not hard pressed for capital then you can cling on to it for one year's target of 700.

Exide Industries

Holding 100 shares @ Rs 88.5 . Closing price on 29 Sep 09 was 89.9

1 yr tgt- 160

You should consider off loading this scrip at current market price. You may like to pick it up again at level of 65 for its one year target of 160.

KSK Energy Ventures

Holding 100 shares @ Rs 210. Closing price on 29 Sep 09 was 203.4

Frankly speaking there can be explosive move either way in this stock. Below 195 it can tumble to a zone between 110 to 140. Above 210 it can race to 280. Since the probability to move southwards is more, exiting the stock at CMP will be more prudent play.

Mahindra Lifespace

Holding 50 shares @ Rs 373 . Closing price on 29 Sep 09 was 385.1

6 mnth tgt- 500, 1 yr tgt- 650, 2 yr tgt- 900

Mahindra Lifespace can move up to 400 but you may be better off to exit the scrip while still in green. You will then have the option to re- enter at 225/250.

Nava Bharat Venture

Holding 15 shares @ Rs 433 . Closing price on 29 Sep 09 was 380.7

1 yr tgt- 850

Though Nava Bharat Venture can correct a great deal, but in my opinion you should keep holding the scrip and plan to double your holding at 260/280. Then you can profitably exit your complete position at one year's target of 850.

NHPC

Holding 785 shares @ Rs 36 . Closing price on 29 Sep 09 was 34.6

1 yr tgt- 42

NHPC can fall down to 22. Keep accumulating from the level of 30 right up to 22. By averaging so you can plan to exit from the scrip in one year's time with a decent profit.

Noida Toll

Holding 300 shares @ Rs 44.3 . Closing price on 29 Sep 09 was 41.9

6 mnth tgt- 60, 1 yr tgt- 85

Noida Toll should correct from here up to 32. Double your position at around 32 level and hold for one year til the target of 85 is achieved.

Praj Industries

Holding 150 shares @ Rs 107 . Closing price on 29 Sep 09 was 102.1

1 yr tgt- 180

Praj Industries can witness serious selling below 96 which may take it all the way down to the zone between 60 and 70. Plan to accumulate the scrip at that level and book profit at its one year target of 180, which may even stretch up to 200.

Tinplate

Holding 200 shares @ Rs 69 . Closing price on 29 Sep 09 was 55.25

1 yr tgt- 145

Keep picking up the scrip from 50 right up to 45 , and just in case it falls further down to 40 do add some more to your portfolio. You can then plan to sell your complete holding at one year's target of 145.

Indian Budget 2009 - Road Map For Future Growth

There had been tremendous expectations on the street from Indian Budget 2009. That was purely on the assumption that with no millstone of Communist Party baggage around its neck, the UPA Govt would take the developmental plank in a big way. Hence the hoopla around Budget 2009. But when the day arrived, the package delivered was quite contrary to expectations of the market. And as it always happens, when market doesn't like some piece of news - it tanks. Imagine how badly hurt its sentiment would have been since it was waiting for this Budget with glee and a certainty of content therein? Hence on Budget Day of 06 Jul 2009, thoroughly annoyed with the Finance Minister, market did a Tandav Nritya - the dance of Anger. From intra-day high of 4480, Nifty crashed to day low of 4134 - a massive thumbs down of 346 Nifty points to Budget 2009. Thereafter it continued to fall and registered a low of 3919 on 13 July 2009.

Indian Budget 2009 has been criticised by all and sundry for lacking direction. It has been vilified as being neither developmental nor populist. Finance Minister has been accused of giving no tweak to the growth engines of India. But I was satisfied. Satisfied because what I had hoped for was finally delivered. Budget 2009 recognised the need to give impetus to two sectors - education and rural development. For acknowledging so, it can be termed as a watershed budget. The foresightedness of this budget needs to be appreciated. In the long run if India wants to be an economic superpower then these two sectors will have to be given due importance from now onwards. And Budget 2009 finally delivered on that score, albeit on an humble scale. I fully agree that such a tough decision was long overdue, but it is never too late to wake up. And India, it seems, is finally waking up!

Why I sound so emotional at this point is owing to the fact that I feel my prayers have been answered by Govt of India. In my blog post titled 'Indian Democracy - Road Ahead' on 16 Mar 2009, I had outlined two major areas, that is of education and rural development, towards which we should focus our energies. This is required to eradicate the ills that this country suffers from. And these ills have shackled us to a large extent from becoming what we richly deserve - a Global Superpower. I hope you can take some time off to revisit the blog post in order to co-relate my line of argument with the visionary provisions of Union Budget 2009. You may click the link for quick reference - http://archana-archdeb.blogspot.com/2009/03/indian-democracy-road-ahead.html

Now to business. If you agree to my point of view and that of Indian Govt, start investing in companies engaged in education and rural development sectors. Do a top down analysis and home on to scrips in these two sectors for long term investment. Not only will you be making a killing , but also be participating in the growth drivers of strong India. A win-win situation for all, wouldn't you say?

PORTFOLIO ANALYSIS - SAMPLE 7 (J P SHARMA)

Presently we are going to do an interesting portfolio analysis of Mr J P Sharma where the choice of companies is rather fascinating. There is immense scope in this portfolio for impressive gains over the next one year. Shall we begin then?

Unitech
Holding 500 shares at an average price of Rs 83. Closing price on 23 Sep 09 was 109
6 mnth tgt- 160, 1yr tgt- 200
Since you are sitting on profit and market correction is expected soon, you may like to sell 50% of your holding at about 120 and release your capital. After the correction you may like to pick up Unitech at 75/80 level. Then hold your position for one year's target of 200.

Suzlon
Holding 500 shares at an average price of Rs 96. Closing price on 23 Sep 09 was 94.6
6 mnth tgt- 180, 1yr tgt- 320
Suzlon should be bought at every dip. So be ready to add to your holding in small packets till level of 80. Such accumulation in the scrip will pay you handsome dividends in one year. Sell your complete position once the scrip reaches the price target of Rs 320.

DLF
Holding 90 shares at an average price of Rs 343. Closing price on 23 Sep 09 was 423.6
6 mnth tgt- 700, 1yr tgt- 900
DLF may correct till 300 and may on extreme conditions go down as much as 250. You can keep a stop loss of 385 and keep holding your position. You may then re-enter the scrip at 300 for the price target of 900 in one year or so.

Bhartiartl
Holding 50 shares at an average price of Rs 612. Closing price on 23 Sep 09 was 413.5
6 mnth tgt- 550, 1yr tgt- 750
Hold your position in this scrip and plan to add to your position during the correction. Fall below 390 can take the scrip to 340/350. Buy 50 additional shares at 350. Hold the scrip for one year's target of 750.

Mundra Port
Holding 50 shares at an average price of Rs 610. Closing price on 23 Sep 09 was 537.5
6 mnth tgt- 800, 1yr tgt- 1100
Mundra port can slide down to 400 if it closes below 520. Double your holding if the scrip touches 400. Hold your position for one year's target of 1100.

RNRL
Holding 200 shares at an average price of Rs 140. Closing price on 23 Sep 09 was 88.15
6 mnth tgt- 145, 1yr tgt- 190, 2 yr tgt- 250
RNRL can correct to 70 once it closes below 83. Keep accumulating the scrip from 70 downwards till 60. Hold your position till one year's target of 190.

Alok Industries
Holding 1000 shares at an average price of Rs 22.45. Closing price on 23 Sep 09 was 22.7
6 mnth tgt- 33, 1yr tgt- 42
Alok Industries can fall to 15 level but you should keep holding your position. You should start accumulating at dips right from 19 till 15. You can then sell your positions comfortably at one year's target of 42.

SBI
Holding 60 shares at an average price of Rs 343. Closing price on 23 Sep 09 was 2142
6 mnth tgt- 2300, 1yr tgt- 3200
You have SBI at IPO price so just keep holding it till its one year target of 3200.

GMR Infra
Holding 100 shares at an average price of Rs 143. Closing price on 23 Sep 09 was 140.7
6 mnth tgt- 200, 1yr tgt- 260
GMR Infra may correct to 110. You may start building up your position from 110 downwards. Hold the scrip for one year's target of 260.

RPL
Holding 160 shares at an average price of Rs 146. Closing price on 23 Sep 09 was 130.4
6 mnth tgt- 200, 1yr tgt- 235, 2 yr tgt 290
RPL can move down to 110 during the coming market correction. But you should only think of adding to your present position. Sell only when the scrip touches 290.

NTPC
Holding 260 shares at an average price of Rs 198. Closing price on 23 Sep 09 was 208.8
1yr tgt- 300
NTPC looks quite dicey below 200. You have a choice to move out of this scrip at current market price and re-enter at 170. It may go down to even 150 level, but over one year it will surely touch 300.

PORTFOLIO ANALYSIS - SAMPLE 6 (KOTHIWALA)

Continuing with our series of portfolio analysis , now we have portfolio of Mr Kothiwala. He has converted most of his portfolio into cash and wisely so. We have to learn to take profit home, otherwise there is no point in investing our time and money in the stock market. But my only piece of advice to Mr Kothiwala would be to start assessing the different sectors and good companies therein, so that he can re-enter the market after the expected correction. Be that as it may, let us now begin to analyse the portfolio or what remains of it!

GVK Power
Holding 2700 shares at an average price of Rs 46. Closing price on 22 Sep 09 was 46.6
6 mnth tgt- 65, 1 yr tgt- 100
You may consider exiting from 50 % of total holding of the scrip at current market price. This will be on a no-profit-no-loss basis, and will give you the capital to re-enter at lower level. This is because GVK power may test 27/30 level in the coming correction. Buy back your shares at 30 and hold for one year's target of 100. Exit complete position once target is achieved.

JP Associate
Holding 500 shares at an average price of Rs 220. Closing price on 22 Sep 09 was 249.8
6 mnth tgt- 390, 1 yr tgt- 500
JP Associate can correct to 170 level. If that happens then pick up 500 additional shares at around 170 and hold your total position of 1000 shares. Sell your complete position at the target price of 500.

Suzlon
Holding 200 shares at an average price of Rs 90. Closing price on 22 Sep 09 was 100.8
6 mnth tgt- 180, 1 yr tgt- 320
Suzlon is a bright candidate to be in any portfolio for the next one year. Hold the scrip and keep adding to your position in small tranches at every dip till 80. Accumulate at least 1000 shares in your portfolio for next one year. Exit your complete position at target price of 320.

PORTFOLIO ANALYSIS - SAMPLE 5 (DILRAJ SINGH)

Today we will analyse portfolio of one Mr Dilraj Singh who is new to the stock market. It will be my endeavour to suggest the best possible way to maximise profit for Mr Dilraj. Hopefully in a year's time Mr Dilraj would have become a strong investor in the stock market. Here we go!

IFCI
Holding 220 shares at an average price of Rs 53. Closing price on 22 Sep 09 was Rs 57.65
1 mnth tgt- 65, 6 mnth tgt- 85, 1 yr tgt 115
You should book your profit once at 65 if IFCI runs up in next few trading sessions. If not, then try and buy 220 more shares at 45 level. Exit your complete position at the target of 115.

Suzlon
Holding 120 shares at an average price of Rs 100. Closing price on 22 Sep 09 was Rs 100.8
6 mnth tgt- 180, 1 yr tgt- 320
Suzlon is a very good buy to keep in your portfolio for long term. Keep adding to your position at every dip till 80. After that hold for one year to reap extraordinary profit.

PTC
Holding 50 shares at an average price of Rs 83. Closing price on 22 Sep 09 was 88.35
6 mnth tgt - 160, 1 yr tgt - 200
PTC may fall down to 70/75 during the coming correction phase of market. That shouldn't worry you because then you will have an opportunity to pick up more shares of PTC. Sell your position only at the target of 200.

Power Grid
Holding 50 shares at an average price of Rs 117. Closing price on 22 Sep 09 was 108.
6 mnth tgt- 160, 1 yr tgt 215, 2 yr tgt - 260
Power Grid can correct right down to 80 level. Keep adding to your position from 90 onwards till 80. Sell your complete position at 215.

RNRL
Holding 30 shares at an average price of Rs 76. Closing price on 22 Sep 09 was 90.65
6 mnth tgt- 145, 1 yr tgt- 190, 2 yr tgt 250
RNRL may correct to 70/75. You should keep an eye on it so that you may pick up more of this scrip at 75. Sell the scrip at its 1 year target of Rs 190.

GVK Power
Holding 50 shares at an average price of Rs 49. Closing price on 22 Sep 09 was 46.6
6 mnth tgt- 65, 1 yr tgt- 100
GVK Power is very weak if it trades below 44, since the chances are that the scrip may fall down to 27/30 level. Keep a strict mental stop loss of 44 and exit your position, thereby taking a loss of Rs 5 per share. Then pick up the scrip at 30 and hold for 1 year's target of 100.

PORTFOLIO ANALYSIS - SAMPLE 4 ( S S HUSSAIN )

Here in this portfolio analysis we have a case of Mr Hussain who wants a three year horizon for his portfolio. However my recommendation to him will be to watch for one year targets and take profit there. After that he will have plenty of opportunity to pick up the shares again at a lower price since those targets are at supply zones. Lets begin the exercise.

DLF
Holding134 shares at an average price of Rs 358. Closing price on 22 Sep 09 was 430.1
6 mnth tgt- 700, 1 yr tgt- 900
You should keep holding the share for a target of 900. It may also trade at 1200 around two years down the line.

GMR Infra
Holding 287 shares at an average price of 76. Closing price on 22 Sep 09 was 142.8
6 mnth tgt- 200, 1yr tgt 260
You have a profitable position to hold. At the most GMR may come down to 110 in near future expected correction. Hold till target of 260 is achieved.

BPL
Holding1000 shares at an average price of Rs 24.15. Closing price on 22 Sep 09 was 36.85
6 mnth tgt- 45, 1 yr tgt- 65
Currently BPL may come down to the zone of 25 to 30. Since you will not be in any loss, therefore keep holding till target of 65.

BHEL
Holding 14 shares at an average price of Rs 1504. Closing price on 22 Sep 09 was Rs 2285.
6 mnth tgt- 2800, 1 yr tgt- 3900.
BHEL may come down to 1700 level in the foreseeable correction. It will be very weak if it closes below 2200. However you do not have to worry since your position will not give you any loss even if the correction does take place. Hence keep on holding it till 1 year's target of 3900.

GSPL
Holding 590 shares at an average price of Rs 59. Closing price on 22 Sep 09 was Rs 79.4
6 mnth tgt- 95, 1 yr tgt- 110
GSPL may correct to 50 level in near term. You may like to add to your position if it does come down to 50. What ever be the case, exit position only at 1 year's target of 110.

Rcom
Holding 90 shares at an average price of Rs 359. Closing price on 22 Sep 09 was 307.5
6 mnth tgt- 500, 1 yr tgt- 600, 2 yr tgt- 810
Rcom may come down to 250 level if the markets correct now, of which there is high probability. You can plan to add to your position at 260 and off load your complete position at two year's target of 810.

Survival Kit For Newbie Investors - Mind Game

Last post was dedicated to Laws of Nature (http://archana-archdeb.blogspot.com/2009/09/starter-kit-for-newbie-investor-greed.html). Last in this series we will now analyse Mind Game. You may think I am kidding, but stock investing is basically a mind game. It tests your character and strength of your mental fabric. If you have any doubt then as you read on you will realize the veracity of my statement. For the time being, simply promise yourself to follow the rules which govern your thinking while investing.

• Rule # 1. Do not change your mind after placing the stop loss order. Many traders who had wisely put a stop loss order, cancelled the same once they saw that the market is going against them. Some shift the stop loss level to try and give time for market to move in the desired direction. This is a seriously flawed behaviour and may result in great losses. It is seen that 90% of the time a trader will be a winner if he maintains the original stop loss level and refrains from cancelling it. When you cancel a stop loss order you are merely hoping against hopes that market will reverse its direction and move in the direction of your trade. This can have a disastrous outcome.
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• Rule # 2. Be firm in your mind while initiating a trade. You must decide to enter a trade after having given due thought to it. It must be done after you are fully satisfied, having done adequate research/consultation. How can you buy stocks when you don't buy vegetables without making elaborate enquiries about the right price!! But once you have arrived at an informed decision then be firm in your thinking and do not change your mind or cancel the trade without adequate reasons.
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• Rule # 3. Should the market reverse direction never let a profit run into a loss of capital. This can be done by raising the stop loss level progressively. This system of progressively increasing the stop loss level will ensure that you roll your profits and cut losses. But the basic mistake that traders have been doing since time immemorial is that they cut their profits short out of fear, and roll their losses on the hope that the market will move in the desired direction. This is a serious mistake and should be avoided at all cost. Be resolute in your mind and use your stop loss orders effectively, and progressively increase them to stay with the trend, till the stop loss order is triggered.

Survival Kit For Newbie Investors - Laws of Nature

After learning the role of greed and fear in last post (http://archana-archdeb.blogspot.com/2009/09/starter-kit-for-newbie-investor-greed.html), its time for Laws of Nature. We need to acknowledge the fact that Laws of Nature govern most of the events on this planet. It is ridiculous to try and defy the supreme powers of nature. If that is accepted then there will be no difficulty in following certain universal laws of nature that work even in stock markets. To be successful in stock market on the long run you will have to observe these laws with fanatical respect. Read on to familiarize yourself with some of these laws and make a strong mental note to follow them at all cost:-

• Law # 1. Markets like everything else in life moves around in sinusoidal cycles. The cyclical nature means that you have to take the ups with the downs. Human emotions of euphoria and inflationary speculation ride the crest of the cycle, where as on the other extreme the emotions of despair and panic straddle on the trough of the cycle. Have the strength, courage and conviction of avoiding such extreme herd mentality while investing in stock market.


• Law # 2. Market manipulations are possible only in the short term, thereafter laws of nature take over in the long run. Primary trend cannot be manipulated . No single individual or group of individuals can exert influence on the major trend of the market.


• Law # 3. Good days cannot continue in perpetuity. There will be good days with the bad. This means that even the best of companies will have to encounter some bad days along its journey. Which brings us to the point that if you believe you are secure from losses by investing in a good company, it is untenable. So do not be emotionally attached to any company. If the situation so demands then do sell X company and enter into a more promising Y company. At the end of it you are in stock market to make money, not to buy ownership of companies. Keep an open mind and do not be dogmatic about which company you buy. As far as you are concerned all businesses are good so long as your buy trade gives you return of your choice.


• Law # 4. Persistence on luck leads to bankruptcy. This behaviour of over-dependence on luck is manifested in stock market in the form of over-trading. One of the biggest blunders of traders is the desire to get rich in a jiffy and hence they over-trade. This calls for heavy dependence on luck. There are numerous examples of big and seasoned traders getting jettisoned out of stock market forever, only due to over-trading. You should guard against this evil with all your might, by strictly following the rules of capital management and stop losses.

Survival Kit For Newbie Investor - Greed And Fear

Last post we discussed golden rules for Stop Loss Order (http://archana-archdeb.blogspot.com/2009/09/starter-kit-for-newbie-investor-stop.html). Now its time to discuss greed and fear. As a new investor you have to first clear your mind of greed and fear. It is easier said than done. Yet you need to constantly remind yourself not to be caught in this trap of greed and fear. I say it is difficult because of the fact that greed and fear are part of basic human nature. You have to toil hard to go against the grain of basic human nature, and that is why I am harping so much on this point. But once you can achieve this frame of mind then you will be able to avoid the catastrophic events of stock market. Hear out what William Gross has to say - "Markets invariably move to undervalued and overvalued extremes because human nature falls victim to greed and/or fear". By staying clear of greed and fear you will avoid the pain of regret as well as save yourself the pain of burning a hole in your pocket. Some of the golden rules are:-

• Rule # 1. When faced with sure gains do not be risk-averse, while faced with sure loss do not become risk-taker.
• Rule # 2. Beware of situations when high percentage of participants become overly optimistic or pessimistic of the future, it is a signal for the opposite scenario to occur.
• Rule # 3. Never aim to enter or exit trade at exact market bottom or top. If you succeed to catch the exact market top/ bottom then you are lucky amongst millions, which most of us are actually not.
• Rule # 4. Avoid entering trade in bubble situations and speculative runs. Sit on the sidelines till dust settles down.

There is a human tendency to give too much weight to recent experiences and extrapolate recent trends that are at divergence to statistical odds and rationale. That is how investors become more optimistic and aggressive in their trade when market goes up and more pessimistic than necessary when market goes down. Let greed and fear not grip you in such situations. Simply remember that what goes up has to come down, and vice versa. Laws of nature will ultimately govern everything in our lives and stock market is no exception. The legendary W D Gann gave utmost importance to the laws of nature and astrology while devising his super successful trading strategies in different markets. Later on in this series we shall also learn to pay our obeisance to the laws of nature.

Survival Kit For Newbie Investor - Stop Loss Order

In the last post we had realised that making few right decisions can completely protect our Capital and thus allow us to be triumphant in stock market ever after (http://archana-archdeb.blogspot.com/2009/09/starter-kit-for-newbie-investor-capital.html). Even Warren Buffet maintains that to be successful "you only have to do a very few things right in life so long as you don't do too many things wrong". But there is a catch here. You are bound to take many wrong decisions in stock market over the long haul. Warren Buffet was well equipped to avoid too many wrong decisions, besides being properly groomed in trading right from early childhood. A little known fact is that Warren Buffet's father was a stock-broker and a parent's influence at an early age in such matters can have tremendous advantage. But most of us are not so very well placed and hence will be prone to making many mistakes while taking trading decisions.

If that be so then what is the solution? The solution lies in limiting your losses from wrong decisions by way of Stop Loss Order. We shall now postulate some golden rules in the words of a legendary trader W D Gann:-

• Rule #1. Remember when you make a trade, you can be wrong, therefore place a stop loss order for your protection.


• Rule #2. When in doubt, get out of the market.


• Rule #3. When you have nothing but hope to hold on to, get out of the market.

With due deference to W D Gann's rules, I would like to hazard a couple of exceptions to the general rule of applying Stop Loss Order in all trades. If you are an investor never put a stop loss order when the stock is trading 80% below its all time high. If you feel that you are entering into a good trade at that level, just go right ahead and buy without stop loss order. You will get a chance to exit honourably even if your trade goes wrong. Simply hold the scrip with patience.

Secondly, if you have confirmation that you are buying in the 2nd phase of a bull run then you may dispense off with stop loss order because the stock price is bound to move above the previous high. If you are not placing stop loss order, then you need to have a firm mind and not panic under any circumstances. In next post we shall dwell upon certain issues relating to investor psychology.

Survival Kit For Newbie Investor - Capital Management

We understood the value of own capital in the last post (http://archana-archdeb.blogspot.com/2009/09/survival-kit-for-newbie-investor-in.html ). Money invested in the stock market is your hard earned money. Preserve it with all your power of will and wit, because believe you me, its a jungle out there where might is right. If that is fully understood then lets go right ahead and enunciate few golden rules of Capital Management in stock market.

• Rule #1. The capital that you employ in stock market should be from your disposable income. Under no circumstance should you violate this rule. This means that you should not ever take loan to finance your trade. To drive home the point let me remind you that investors had taken huge loans from financial institutions ably aided by broking houses for the much hyped and overly priced IPO of Reliance Power. And they got bust! That is not to mention the plight of investors in Gujarat over this IPO, indulging in the grey market trade.
• Rule #2. In any single trade never commit more than 10% of your capital. In case it fails then you will not have to spend sleepless nights over it. And you will be in a fighting fit condition to recoup that loss in other trades. But just imagine if you were to commit 80- 100% of your capital in a single trade and it fails. You will be wiped out of the market for good.
• Rule #3. Initially make it a habit to take out the profit you earn from stock market and keep it in separate bank account not linked to your trading account. You should keep on siphoning this profit till it equals the amount of your initial capital employed in stock market. For example you have done an initial investment of Rs 1 million. You should take your profit out of your trading platform till your profit equals Rs 1 million. Then you are mentally free to trade the market since you have fully secured your initial capital in this manner.

Rules enunciated above are to be adhered to in letter and spirit. You may crib about these rules since they may curb your style, but they are a must for your long term survival and success. Let me assure you that if you take few right decisions now, it won't take you more than a year to accrue profit equal to your initial capital employed. And imagine a scenario only one year down the line when you are trading in the market with your initial capital fully protected by following Rule #3. You will have the psychological advantage to go aggressive in trade and make killings after killings. Of course those killing trades will have to be entered into with proper protection of stop loss order. Always remember to put on your protective gear, since its a war - a jungle war! Next post we shall evaluate the efficacy of this protective gear called Stop Loss Order.

Survival Kit for Newbie Investor in Stock Market

New to stock market investment? If your answer is 'yes' then read on. If your answer is 'no' then also read on, because to survive in stock market on long term we need to constantly remind ourselves of the simple age old and proven golden rules of investment in stock market.

At this point I am taking the liberty to seek a promise from newbie investors and that is a promise to not make the mistakes most seasoned investors have made sometime or the other in their lives. The harsh reality is that the market does not pardon mistakes and some mistakes can be almost fatal. You can avoid all these pitfalls by simply adhering to certain golden rules which I am terming somewhat flamboyantly as 'Survival Kit for Newbie Investors'.

To further drive home the point let me present to you an unspoken secret of investors in stock market. It is on record that in Wall Street the seasoned traders/investors always talk of their profits and not the losses sustained by them. This gives newcomers the feeling that there is only money to be made in this market and hardly any chance of losses. But the damning truth is that if you do not enter the arena having donned adequate protective gear then the chances of losses are far too many. And your protective gear comprises of the golden rules contained in this series called the 'Starter Kit for Newbie Investors'.

In case you manage to survive without the protective gears then you should consider yourself extremely lucky. If that is the case then you would be better advised to try your hand at a casino, since your Lady Luck is benevolent towards you. For most of the investors though, that is not the case and hence my over-emphasis on adhering to golden rules of investment. To stretch the point further I would strongly maintain that even with protective gear, you need to be always on your guard. Keep your guard up anytime and every time because a champion boxer knows that the moment he lets his guard down in complacency, he can be knocked out by a freak blow. In recent memory one is reminded of Satyam scam as an example of such freak blow.

The bottom line is that if you want to be a consistent champion investor you need to abide by some golden rules. If you have to err, then please err on the positive side. Make no such move that can erode your capital. So what if you have missed an opportunity, at least that mistake has taken nothing from your pocket which is a huge positive in a stock market. This brings us to an important issue of Capital Management which we shall discuss in the next post. Keep an eye on this space daily and get yourself fully armed before joining battle in the stock market.

PORTFOLIO ANALYSIS - SAMPLE 3 ( X-8 )

In this series of Portfolio Analysis for Mr X , we have come to the end of the road with this tranche. Today we have analysed some assorted stocks which covers the complete portfolio of Mr X. I hope you have enjoyed reading the complete portfolio of Mr X as much as I have, analysing it. Here's last of the wilds for your eyes only!!

SESA GOA

Holding 100 shares at average price of 206. Closing price on 11 Sep 09 was 242.1.

6 mnth tgt - 300; 1 yr tgt - 470

Sesagoa seems to be in belligerent mood and is constantly trying to notch higher scales. But it has moved up too fast too soon. It is likely to touch level of 155. So take your profit now at current level and wait for correction. Pick up the scrip again at 160 and wait for a year to reap benefits from the scrip at 470.

BEL

Holding 10 shares at an average price of 1202. Closing price on 11 Sep 09 was 1371.

6 mnth tgt - 1800; 1 yr tgt - 2500

BEL will fall to sub 1300 initially and maybe jump to 1400. But that will be short lived and you may see the scrip trading at 1000 level in short term. Be conservative and take home your profit at current level. Re-enter the scrip at 1000 level and wait for one year to sell the same at 2500 level.

DLF

Holding 50 shares at average price of 525. Closing price on 11 Sep 09 was 398.6

6 mnth tgt - 700; 1 yr tgt - 900

DLF may correct from here but do not be disheartened. Hold the scrip for one year target of 900. If you can keep the share for a longer term of two years then you can see the target of 1200 also.

OMAXE

Holding 60 shares at average price of 310. Closing price on 11 Sep 09 was 123.2

6 mnth tgt - 180; 1 yr tgt - 240

Omaxe is again a hold for you. But you should add shares in your portfolio at 110 or even at current market price. You should sell this bundle of 120 shares at its one year's target of 240.

PARSVNATH

Holding 60 shares at average price of 300. Closing price on 11 Sep 09 was 119.2

6 mnth tgt - 195; 1 yr tgt - 240

Parsvnath may correct to 80 so keep adding this scrip in small packets till level of 80. Then hold the scrip for its one year's target of 240.

MUNDRA PORT

Holding 45 shares at average price of 440. Closing price on 11 Sep 09 was 534.

6 mnth tgt - 800; 1 yr tgt - 1100

Mundra Port may correct to 400 level. So book your profit now and again re-enter at 475 and keep adding to your position till 400. Then you can hold your position till target of 1100 is achieved.

ONGC

Holding 52 shares at average price of 850. Closing price on 11 Sep 09 was 1177.

6 mnth tgt - 1350; 1 yr tgt - 1900

ONGC is likely to correct to 975. So it will be best to book your profit now. Re-enter at 1000 level and hold till the target of 1900.

THERMAX

Holding 40 shares at average price of 598. Closing price on 11 Sep 09 was 478.1.

6mnth tgt - 650; 1 yr tgt - 890

Thermax will correct to 350 level. But do not worry. Just add 40 shares at 350 level for target of 890.

VOLTAMP

Holding 20 shares at average price of 690. Closing price on 11 Sep 09 was 840.

6 mnth tgt - 1150; 1 yr tgt - 1300

Voltamp is moving sideways in a tight band between 700 and 900. With market expected to correct in near future it would be advisable to book profit at current level. You can re-enter the scrip above 900 for a target of 1100. Otherwise wait for correction and enter the scrip at 600 level for a target of 1300.

VOLTAS

Holding 100 shares at average price of 122. Closed at 147 on 11 Sep 09.

6 mnth tgt - 195; 1 yr tgt - 300

Voltas is looking for excuse to fall in near term and hence would qualify for sell. It may fall to 90 level and so book your profit at current level. Pick up the stock again at around 90 for a target of 195 at least.

PORTFOLIO ANALYSIS - SAMPLE 3 ( X-7 )

In this tranche of Mr X's portfolio we will dwell upon some scrips belonging to Auto Sector and Steel Sector. Stay tuned!

MARUTI
Holding 80 shares @ 750, CMP - 1518

1 yr tgt- 2600

Maruti has had a fabulous run up and is probably a spent force. You are sitting on more than 100% profit and there is no reason to hold on to such a position. With market correction Maruti can so easily come down between 800 to 875. Booking profit and re-entering after correction would be a prudent thing to do.

ASHOK LEYLAND

Holding 200 shares @ 36, CMP - 41.25

6 mnth tgt- 55; 1 yr tgt- 70

Immediately Ashok Leyland can touch 44. That should be the point to book profit but then you should re-enter at 36 during its correction. From there on you should hold the scrip for one year's target.

TATA MOTORS

Holding 50 shares @ 780, CMP - 565.8

6 mnth's tgt- 700, 1 yr's tgt- 830

Tata motors should correct from here to about 400. You should pick up 50 additional shares at 400 level. Keep one year's target to exit the scrip

JSW STEEL
Holding 55 shares @ 618, CMP - 731
6 mnth tgt- 1050, 1 yr tgt - 1350

JSW Steel can be held for 6 month's target of 1050 and then trading techniques should be employed for maximising profit at major dips. Major correction in the scrip could also come around 850.

TATA STEEL
Holding 120 shares @ 270, CMP - 464.8
6 mnth tgt - 700 , 1 yr tgt- 900

Tata Steel could be held for at least six month's target of 700 and then trading at dips could be done. However if you do not want to trade then keep the scrip for one year's target of 900.

PORTFOLIO ANALYSIS - SAMPLE 3 ( X-6 )

Today we will touch upon Power stocks in Mr X's portfolio. There is clear weakness in Power stocks and hence when there is correction in indices these stocks will lead the fall. Have a profound look.

TATAPOWER

Holding 20 shares @ 1085. CMP-1281

You are sitting on profit and so quit Tatapower at around 1295. Sure Tatapower will do 1600 in about a year's time, but that will happen after it first drops down to 1000 level. In fact 900 to 950 is not ruled out in this scrip.

NTPC

Holding 450 shares @ 187. CMP- 206.2

NTPC will witness strong selling below 200. So there is enough reason for one to avoid risk in this counter. Take your small profit at around 210 and wait for entry at 170 level. In fact NTPC may see even 150 level. But after that it will surely rise to 300 in one year.

BGR ENERGY

Holding 168 shares @ 301. CMP- 448.2

BGR Energy like other power stocks may correct fiercely. Since it may fall down to 300 there is no point in holding on to this scrip now. Book your profit and wait for the correction to re-enter. In a year's time this scrip should be trading between 650 to 700.

POWER GRID

Holding 268 shares @ 52. CMP- 108

Power Grid has the power to touch 200 in a year's time. However presently it is showing enough weakness to fall. It may fall as low as 80 level because below 105 it will witness ferocious selling. You are in profit and hence it is advisable to take profit at current level and re-enter the scrip at around 80.

Power Fin Corp

Holding 80 shares @ 85. CMP- 225

Power Fin Corp is slightly stronger than other power stocks. However one needs to be cautious in our approach. There is substantial profit for you at current level and therefore it will be nice to book your profit. Power Fin Corp can correct to 170 level. In its downward journey it may travel to as low as 150. Not withstanding that, in about one year it is expected to go up to 380.

PORTFOLIO ANALYSIS - SAMPLE 3 ( X-5 )

In this post we continue analysis of Mr X's portfolio with few more financial institutions. With this I guess we would have covered more or less all important banking scrips. Mr X sure has the right choice of banking scrips.

YES BANK
Holding 100 shares @ 138. CMP-168.5
6 mnth tgt- 220; 1 yr tgt- 310
Yes bank may decline to level of 120. It may so happen that in current run up it may rise to around 180. But it will be prudent to exit with profit at current level and take fresh position at 120 level.

CANARA BANK
Holding 102 shares @ 202. CMP- 281.8
6 mnth tgt-360 ; 1 yr tgt- 460
Canara Bank has corrected up to 38.2% but it may visit 220 before resuming its upwards journey again. Hence you should take your profit and re-enter the scrip at 220.

SYNDICATE BANK
Holding 100 shares @ 85. CMP- 80.5
6 mnth tgt- 105; 1 yr tgt- 145
Syndicate bank has corrected 50% but it is likely to touch 70 before moving up. Be ready to buy 100 shares more at 70 and sell all your holdings at 1 year's target of 145.

VIJAYA BANK
Holding 100 shares @ 53. CMP- 42.1
6 mnth tgt- 70; 1 yr tgt-83
Vijaya Bank has moved up after correcting 38.2% but it can still slide down to 35. Look for that chance to buy 100 additional shares at 35. After that wait for 1 year to sell 200 shares at 83.

IDBI
Holding 200 shares @ 76. CMP- 106.5
6 mnth tgt- 135; 1 yr tgt- 165
IDBI can move down to 78. However you can hold your position till 1 year's target of 165, because IDBI is in very strong up-move formation. In case the scrip moves down then you can buy 200 shares more at 80.

IDFC
Holding 400 shares @ 100. CMP- 134.8
6 mnth tgt- 180; 1yr tgt- 250
IDFC has yet to correct sufficiently and therefore it may come down to 93. You may like to book your profits at current market price. You may re-enter once the scrip reaches 93 level.

PORTFOLIO ANALYSIS - SAMPLE 3 ( X-4 )

Like photons of light, the next packet of Mr X's portfolio analysis is here to focus on Banking stocks. During the course of analysis one singular thought that goes through mind is that the banking stocks are likely to dip sharply in very short term. Notwithstanding that, one sees a bright future for the banking sector in medium to long term. Just take a look.

STATE BANK OF INDIA
Holding 78 shares @ 1340. CMP- 1762.45
6 mnth tgt- 2300, 1 yr tgt- 3200
SBIN has corrected 38.2% so far and has yet to cover its gap at 1380. So it would be no surprise if it gravitates to 1380 in near term. Since you are sitting on profit it would be advisable to quit your position at current market price. Enter SBIN again at 1400 level for a period of 6 months in order to maximise your profits.

BANK OF BARODA
Holding 50 shares @ 327. CMP- 427.3
6 mnth tgt- 550, 1 yr tgt- 800
Bank of Baroda has corrected just about 38.2% but has not covered its gap at 350. In days ahead it may correct to 330. Here you may like to book your profit and again re-enter once the scrip visits the level of 350. Then you would be well advised to keep the stock for a period of 6 months.

PNB
Holding 71 shares @ 395. CMP- 681.35
6 mnth tgt- 850; 1 yr tgt- 1200
PNB has not corrected sufficiently enough and may do so now. Take your profit home at CMP, since it may correct to 500 level. After that you may like to trade for different targets given above.

ALLAHABAD BANK
Holding 1925 shares @ 82. CMP- 93.15
6 mnth tgt- 110; 1 yr tgt- 140
Allahabad Bank has just about corrected to 38.2% , but still not covered its gap at 61. It will therefore be no big surprise to find the scrip tumbling to 60 in coming days. My advice would be to book profit in your position and wait for 60 level to re-enter. You can then begin your trading for different targets given above.

ICICI BANK
Holding 176 shares@ 880. CMP- 743.9
6 mnth tgt- 950, 1 yr tgt- 1400
There is an uncovered gap at 579 and ICICI Bank has not corrected enough to touch even 38.2%This is a tricky situation where analysis says that ICICI bank should correct to 520 in near term and you are presently in loss. Of course you can simply wait for six months to liquidate your position at 950. The other way round is to sell 56 shares at current market price and take a chance by booking this loss. In case the scrip does not correct then your holding of 120 shares will cover the loss you would have made in 56 shares by exiting at 950. But if ICICI does correct as I am foreseeing then you will have a chance to enter at 520 level, thereby giving you an opportunity to bring down your buy price in the scrip.

PORTFOLIO ANALYSIS - SAMPLE 3 ( X-3)

The next packet from Mr X's portfolio will be examined and I hope some of the capital goods companies discussed here will find their foot-marks in your portfolio too. Without much ado lets unveil the analysis for whatever it is worth.

ABB
Holding 10 shares @ 1109. CMP- 729.2
1 mnth tgt- 900, 6 mnth tgt- 1200, 1 yr tgt- 1400
ABB has corrected 38.2% and may come down to 580 in days ahead. Not to worry. Stay invested till the scrip reaches its 6 mnth tgt.

L&T
Holding 100 shares @ 2000. CMP- 1515
6 mnth tgt- 1950, 1 yr tgt- 2800
L&T has not yet corrected sufficiently to qualify for its journey in the 2nd leg of bull run. Hence in near future one has to be cautious on the buy side. It can move down swiftly to 1000 level which will give it 50% correction. It will then be able to cover a gap it created at 1000. You may buy 100 more shares at 1000 level and hold them till L&T reaches its 6 month target of 1950.

BHEL
Holding 120 shares @ 1770. CMP-2197
6 mnth tgt- 2800, 1 yr tgt- 3900
BHEL has not corrected and is a likely candidate to do so in coming days. Its 50% correction should take it tumbling to 1700 level. It is at this level that it has left a gap uncovered and hence may hurry to cover it at 1765. You may be well off to sell your shares at current market price and pick it again at your original buy price. After that you can off load at its 6 month target price of 2800

Havells
Holding 100 shares @ 22. CMP- 288.8
1 mnth tgt- 400, 6 mnth tgt- 500, 1yr tgt- 595
Havells has completed its 50% correction act and is well poised to take higher trajectory for 2nd leg of bull run. Since you are holding it at 22 you should book your profit at 500 and again re-enter after major correction. In doing so your holding of Havells will be free of cost and you would have profited, if you buy it back at a price lower by more than Rs 22. After that you should look to exit at 1 year target of 595.

Crompton Greaves
Holding 100 shares @ 250. CMP- 310
6 mnth tgt- 420, 1 yr tgt- 520
Crompton has not corrected itself in any real earnest and hence may do so now. Its propensity to correct may take it to as low as 180 where it will then be covering a gap it left behind while going on a meteoric rise. You could exit your profitable position at current market price and come into cash so that you can re-enter at 200 level. You should then hold your position for 6 month's target and trade serious dips. In this process of trading major dips you should finally exit at 1 year's target of 520.

PORTFOLIO ANALYSIS - SAMPLE 3 ( X-2 )

The second tranche of Mr X's portfolio is here. This packet may compel some to take a deep look at few IT companies and derive an outlook for IT sector as a whole. Take a peep!

INFOSYSTCH
Holding 20 shares @ 2118, CMP -2165
In this run up Infosys has not corrected to the extent that it should have. Therefore in near future there is a distinct possibility of Infosys correcting to a level of 1700 or so. Such correction is essential for the scrip to attain stability for its long term growth trajectory. You may consider emptying your kitty of Infosys at level of 2300 or thereabouts. After that wait for a major correction in the scrip to re-enter and hold it for 1 yr's tgt of 3300.

SATYAM
Holding 100 shares @ 425, CMP - 120.8
1 mnth tgt 145; 6 mnth tgt- 185; 1 yr tgt- 320
Buy 200 shares of Satyam at current level and hold for 1 year target of 320. In this fashion you would be able to exit your position with profit since you would have averaged the scrip to a buy price of 220. To further bring down your buy price you may toy with the idea of trading additional 300 shares at target levels indicated above.

HCL TECH
Holding 200 shares @ 250, CMP - 309.1
You are sitting on profit in a scrip which hasn't corrected yet. In fact the whole IT pack has yet to correct its rise. Hence I am of the opinion that you should liquidate your position in HCL tech at 310 and wait for a major correction before re-entering. Level of 200 will be a decent correction level to buy. After buying the correction you should hold the scrip for one year's target of 450.

3IINFOTECH
Holding 600 shares @ 188, CMP - 84.35
1 mnth tgt - 114, 6 mnth tgt- 135, 1 yr tgt - 172
Buy 600 additional shares of 3iinfotech so that your average Buy Price drops down to 118. Then you can exit all your positions at 6 month's target and trade subsequent corrections; or simply wait for 1 year's target of 172 for off-loading 3iinfotech.

MASTEK
Holding 100 shares @ 327, CMP -311.9
6 mnth tgt - 400, 1 yr tgt- 460
Mastek may correct to 260 in near term. In case you get a chance in coming trading sessions to exit your positions at 335 then it would be quite comfortable. If not, then wait for 6 month's target to take home some honourable profit.

PORTFOLIO ANALYSIS - SAMPLE 3 ( X -1 )

In this Portfolio Analysis I m constrained to use the name as Mr X, for which I hope you will pardon me. Mr X's portfolio will take quite a few posts to complete since the list of shares in the portfolio is quite long. So I will be breaking the portfolio into small packets and posting the analysis in tranches. And another thing - those scrips already analysed in earlier posts will not contain the reasoning portion of analysis. For that do refer the earlier posts for more information. The first pie of Mr X's portfolio is presented below :-

Reliance
Holding 305 shares @ 2300. CMP- 1971
1 mnth tgt- 2360, 6mnth tgt - 2900, 1 yr tgt - 4000
Sell 50 shares at 2360 . Pick it up again at around 2000 and keep it for 6 mnth's tgt of 2900. In this manner you may trade these 50 shares till it reaches 1 yr's tgt of 4000. Rest of your holdings you can book profit at 4000.

Rcom
Holding 450 shares @ 490. CMP- 276.1
1 mnth tgt- 350, 6 mnth tgt - 500, 1 yr tgt- 600, 2 yr tgt- 810
You can sell 250 shares at 530 and trade these at major dips. Otherwise simply hold all your shares for 1 yr tgt of 600.

Rpower
Holding 104 shares @ 300. CMP- 160.4
1 mnth tgt- 200, 6 mnth tgt- 280, 1 yr tgt- 330, 2 yr tgt-480
Rpower has already completed 50% correction of its 1st leg of bull run. Hold all your shares for 1 yr tgt of 330.

RelCapital
Holding 15 shares. CMP- 892.4
6 mnth tgt- 1420, 1 yr tgt- 2100, 2 yr tgt - 2900
Book your initial profit at 1420 and then start trading strong dips as per your capacity.

TCS
Holding 136 shares @ 850. CMP- 534.6
TCS may correct to 380 in near term and will take about 1 yr to reach 850. Its all time high is 694.5 so I should believe that the buy price may actually be 650 instead of 850. Not withstanding that, I would recommend that you should buy 136 shares more in case TCS falls down to 400.