Stock Futures Trading Made Un-Ezy : J P Associates

When you start making mistakes, they come in a bundle. After making the mistake of getting overwhelmed by company aura and fundamentals in the case of Reliance (as discussed in my last post http://archana-archdeb.blogspot.com/2010/09/stock-futures-trading-made-un-ezy.html), I made the cardinal mistake of 'trading news' in this curious case of JP Associates. I seem to have developed a penchant for not practicing what I am preaching. In fact just 45 days back, I had written a post which did spell out things to be ensured to succeed in trading stock futures. And of course in that post I clearly warned everyone against trading any news - good or bad. Check out this link here : http://www.stockezy.com/opinions/6872/stock-futures-trading-made-ezy-ultra-tech-cement/

But when it came to observing my rules, I fell short of expectations. The news, which lured me into breaking my own rules, was that a deal had been brokered between agitating farmers and UP Govt for land compensation rate along Yamuna Expressway. Agitating farmers were demanding higher compensation rate for acquisition of their land by UP Govt. Finally the govt conceded to giving Rs 580 per sq m to agitating farmers. This was a huge plus for JP Group which is developing  Yamuna Expressway and connected infrastructure along this corridor. Now JP Group could progress with Project implementation in real earnest after lingering for nearly nine years.

The potential of this news was so huge that JP Associate Aug Futures surged from 117 to 125 in 3 trading sessions. On fateful day of 23rd Aug I succumbed to the potential of this news and recommended a buy at 121/122.5 to my subscribers at http://www.stockezy.com/ . From that day onwards JP Associates kept sliding down for eight trading sessions. On 31st Aug it made a low of 107.8. The reason for this slide was that a faction of farmers led by a new leader rejected the deal and hankered for still higher compensation rate. They even turned violent and burned earth moving equipment and damaged other assets of JP Group. So much for trading good news!!

Sitting 1600 km away we had to move into damage control mode. On 30th Aug  I advised my subscribers to buy one lot JP 120 Call of Sep series at 2.5/3.5. Again on 31st Aug  I advised them to buy another lot of JP 110 Call of Sep series at 4.05/4.15. Un-ezy trading details, as things happened in trading room on daily basis, are available in this link here : http://www.stockezy.com/opinions/7186/buy-jp-associate-sep-futures/

In last trading session JP Associates Sep Fut made a high of 127.7 . But for me and my subscribers it was one of the costliest lessons learned the hard way - "Never trade News".

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.