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.