Showing posts with label Reliance. Show all posts
Showing posts with label Reliance. Show all posts

Tuesday, September 14, 2010

Stock Futures Trading Made Un-Ezy : Reliance Industries

Harsh lessons have surfaced from trading Reliance Futures. A company which stands at world No 2  in terms of returns to shareholders, has given sleepless nights to my subscribers for about a month for having bought it at seemingly reasonable price level of 1000. This happened at a time when indices were slowly creeping northwards, while Reliance slid south.

Let me begin from the start. On 10 Aug 2010, I had recommended buying Reliance Aug Fut to my subscribers at  at 990/1000. This decision to buy at 1000 level was result of  awe for the company and not any technical reason. On the contrary I had aired my  technical view at the site on 6th Aug. Reproduced  below is relevant comments section of this link which explains it all :-

Mam. I have one lot reliance @ 1017. bought it yesterday. what are your views for reliance? Its been making new lows everyday.
@Shantanu. Reliance is technically in down move. It has strong support at 960. So broadly it will come down to 980 before it manages a technical bounce. So try and get out of this position at around 1020.
But as I mentioned earlier, the fundamentals of the company got the better of my senses and I was as if mesmerized into recommending  Reliance, believing 1000 level to be mouth watering level, against my own technical reading. Result was that on 18th Aug the scrip slid down to 962.4 and from there bounced back to  997.4 on 20th Aug. So much profit could have been realized if only I had not got over-awed by  name of the company. While trading stock futures it is absolutely imperative not to get carried away by fundamentals of a company.  In fact  12 months back I had laid down certain Laws to be observed during trading in stock market. In this trade I violated Law #3 enunciated in this post of mine
Finally on 30th and 31st Aug  when Reliance made a low of 920.9 we had to resort to buying one lot each of Reliance Sept 1000 and 980 Call options. This was to facilitate easy exit from the combined  positions of Futures and options. That was achieved and today in trading  Reliance finally made a day high of 1004, revisiting our buy price level. Uneasy actual trading details are here in this link

Wednesday, September 2, 2009


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 :-

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.

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.

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.

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.

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.

Saturday, August 29, 2009


In this series of Portfolio Analysis, now we shall be taking up Portfolio of Mr R Rohmetra who wants a long term view of 3/4 years. Since the definition of long term has somewhat changed I am offering him targets only up to two years. In that also I am not recommending some of the scrips for a two-year view for various reasons like uncertainty, correction phase expected to drag it lower than its 1 year target, etc etc. Similarly I have deliberately refrained from giving one month's target to some of the scrips because these scrips may get churned through some rough correction in near future. So here we go!

Holding 20 shares at average price of 1435. Closing price on 28 Aug 09 was 763.6.
6 mnth tgt - 950; 1 yr tgt - 1300; 2 yr tgt - 1650
ICICI Bank has still not corrected to 50% of its run up from Mar 2009. In fact it has not even corrected 38.2%. It has also yet to cover the gap created at 579. This means that in short term this scrip might correct to 535. Hold the scrip for its one year target of 1300 and add 40 shares more in case it falls to 535.

Holding 09 shares at an average price of 1803. Closing price on 26 Aug 09 was 872.5.
6 mnth tgt - 1420; 1 yr tgt - 2100; 2 yr tgt - 2900
Reliance Capital has completed its 38.2% correction of 1st phase of Bull run but has yet to do 50% retracement. It also has not covered a gap it created at 599. However all this does not disqualify it for continuing its march upwards in 2nd phase of Bull run. It only tells us that there is scope for the scrip to correct to 600 in short term. If it does correct to 600 level then buy 18 more shares and hold till 1 yr tgt of 2100. In case it does not correct from here then just keep on holding till its one year target.

State Bank of India
Holding 25 shares at average price of 1359. Closing price on 28 Aug 09 was 1782.
6 mnth tgt - 2050; 1 yr tgt - 2500; 2yr tgt - 3200
SBIN has corrected 38.2% but not corrected 50%. It has also not yet covered its gap at 1327. Hence in short term there is a chance that the scrip may come down to 1300. Just hold for at least 1 year's target. You may consider doubling your position at 1300 level.

Holding 97 shares at average price of 285. Closing price on 28 Aug 09 was 413.
1 mnth tgt - 550; 6 mnth tgt - 740; 1 yr tgt - 900; 2 yr tgt - 1200
DLF has completed 50% correction of its 1st phase of Bull run and is cruising in 2nd phase of Bull run. Hold this scrip till it achieves its 1 month's target of 550. After that you may consider liquidating half your holding and buying back those many shares after a substantial correction, this time for 6 month's target. You may repeat this process till you reach two year's target for the scrip.

Holding 15 shares at average price of 1316. Closing price on 28 Aug 09 was 1618.
6 mnth tgt - 1800; 1 yr tgt - 2200; 2 yr tgt - 2850
L&T has not completed 50% or even 38.2%retracement of 1st leg of Bull run. It needs to cover its gap at 1000. So in short term there is an atmosphere of uncertainty about the stock. However if the scrip reaches its 6 mnth target of 1800 in a month or so, then do sell the stock and book profit. Pick it up again after a strong dip and hold till its one year target.

Power Grid
Holding 1000 shares at average price of 138. Closing price on 28 Aug 09 was 107.6.
6 mnth tgt - 160; 1 yr tgt - 215; 2 yr tgt - 260
Power Grid has corrected 38.2% but not 50%. It may yet correct till 91. If it does come down to 91 then you may pick up 500 more shares and hold till its 1 year target of 215.

Holding 49 shares at average price of 130. Closing price on 28 Aug 09 was 95.25.
1 mnth tgt - 120; 6 mnth tgt - 160; 1 yr tgt - 200
PTC has technically started breaking out and will be very interesting to watch in the coming month. Hence you can contemplate buying 50 more shares at present level for one month's target. However your original holding of 49 shares should be held till the scrip reaches its one year target of 200.

Tata Power
Holding 09 shares at average price of 1111. Closing price on 28 Aug 09 was 1343.
1 mnth tgt - 1500; 6 mnth tgt - 1700; 1 yr tgt - 2300
Tata Power has not done even 38.2% retracement. However it looks eager to reach its target of 1500. You may like to book your profit at 1500 and then re-enter after it corrects itself in real earnest. After re-entry you should hold the scrip for its 6 month's target of 1700, book profit and employ the same strategy for its 1 year target of 2300.

Holding 75 shares at average price of 1309. Closing price on 28 Aug 09 was 2074.
1 mnth tgt - 2360; 6mnth tgt - 2900; 1 yr tgt - 4000
Reliance has completed its 50% correction and should be held at least till 2360. After that you may start trading half your holding to maximise your profits till it reaches its 1 year target.

Holding 683 shares at average price of 96. Closing price on 28 Aug 09 was 85.85.
1mnth tgt - 110; 6 mnth tgt - 145; 1 yr tgt - 190; 2 yr tgt - 250
RNRL has already witnessed 50% correction and is well poised to embark on the 2nd leg of its northwards journey. Hold RNRL for its two years' target.

Holding 1800 shares at average price of 145. RPL closed at 127.9 on 28 Aug 09.
1 mnth tgt - 160; 6 mnth tgt - 200; 1 yr tgt - 235; 2 yr tgt - 290
RPL has also completed 50% retracement and should be held till 290.

Holding 40 shares at average price of 766. Rcom closed at 265.6 on 28 Aug 09.
1 mnth tgt - 350; 6 mnth tgt - 500; 1 yr tgt - 600; 2 yr tgt - 810
Rcom has done 50% retracement of its first leg of Bull run. So you may buy 40 shares at current level and sell at its one month's target of 350. In this way you can bring down the Buy Price of your original holding. You can choose to employ this strategy many times in this scrip's journey towards its designated targets. However sell your original holding at 810.