PORTFOLIO ANALYSIS - SAMPLE 2(R ROHMETRA)

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!

ICICI Bank
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.

Relcapital
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.

DLF
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.

L&T
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.

PTC
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.

Reliance
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.

RNRL
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.

RPL
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.

RCOM
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.

PORTFOLIO ANALYSIS - SAMPLE 1(ABHINAV)

The reason why I have undertaken this particular exercise of Portfolio Analysis is simple. Here is the time to take hard look at your portfolio, if you have one. I am going to give answers to some investors who have been enquiring as to what to do with the present holdings in their portfolio. To start with this exercise let me take up the portfolio of one Mr Abhinav, who wants one year's view of his portfolio. His portfolio holding reads like this:-
3iinfotech
Holding 500 shares at average price of 75. Closing price on 26 Aug 09 was 88.6.
Resistance - 94.
1 mnth tgt - 114
6 mnth tgt - 135
1 yr tgt - 172
3iinfotech is in 2nd phase of Bull run and the correction for 1st phase of Bull run has already happened upto 50%. Hence it is an eligible candidate for hold. It needs to be accumulated at every serious dip till it reaches its 1 yr target.
Arvind
Holding 500 shares at an average price of 22.5. Closing price on 26 Aug 09 was 31.9.
Resistance - 35
1 mnth tgt - 41
6 mnth tgt - 52
1 yr tgt - 62
Arvind Mills has completed its 50% correction of 1st phase of Bull run and presently in 2nd phase of Bull run. It can be accumulated at every dip for its 1yr target of 62. Presently a strong contender for hold.
Dish TV
Holding 250 shares at average price of 38. Closing price on 26 Aug 09 was 48.65.
Resistance - 57.
1 mnth tgt - 65
6 mnth tgt - 75
1yr tgt - 103
Dish TV looks pretty to be held through its journey in 2nd phase of Bull run since the scrip has completed 50% retracement of its 1st leg of Bull run. Hold and accumulate in major dips till its 1 yr target of 103.
Mirc Electr
Holding 2000 shares at average price of 16. Closing price on 26 Aug 09 was 19.45.
1 mnth tgt - 23.5
6 mnth tgt - 26
1 yr tgt - 28
Mirc Electronics has completed 50% correction of its 1st phase of Bull run and is sailing in 2nd phase of Bull run. Hold this scrip till it achieves its 1 mnth's target of 23.5. After that wait for major correction and again pick it up at around 18 for its 1 yr target of 28
Suzlon
Holding 350 shares at average price of 110. Closing price on 26 Aug 09 was 93.6.
1 mnth tgt - 139
6 mnth tgt - 180
1 yr tgt - 255
Suzlon has also completed 50% retracement of 1st leg of Bull run and is well poised for substantive jump in its 2nd leg of Bull run. Hold for impressive returns. One can accumulate more at current level also for 1 yr target of 255.
Satyam
Holding 800 shares at average price of 136. Closing price on 26 Aug 09 was 110.2.
1 mnth tgt - 145
6 mnth tgt - 185
1 yr tgt - 320
Satyam needs to be held till 145 at least, but this has to be again picked up at regular corrections till it achieves its 1 yr target of 320.
GMR Infra
Holding 100 shares at average price of 136. Closing price on 26 Aug 09 was 142.9.
1 mnth tgt - 170
6 mnth tgt - 200
1 yr tgt - 260
GMR Infra can be liquidated initially at 170 and again bought at 150 for its 1 yr target of 260.
Ind Hotel
Holding 150 shares at average price of 60. Closing price on 26 Aug 09 was 65.75.
Resistance - 80
1 mnth tgt - 90
6 mnth tgt - 120
1 yr tgt - 132
Hold Ind Hotel for its 6 month's target of 120.
Zee News
Holding 400 shares at average price of 43. Closing price on 26 Aug 09 was 44.35.
Resistance - 50
1 mnth tgt - 62
6mnth tgt - 75
1 yr tgt - 95
Hold Zee News for its 1 month's target of 62. Keep accumulating at major dips for its 1 yr target of 95.

OPPORTUNITY ROUND THE CORNER - INDIAN STOCK MARKETS

Found a quote on investor psychology in a blog "Just Nifty" by Illango which to me seems so very apt for common investors. Take a moment to mull over it.

"The reason is that a man may see straight and clearly and yet become impatient or doubtful when the market takes it time about doing as he figured it must do. That is why so many men in Wall Street, who are not at all in the sucker class, not even in the third grade, nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight." Quote by Jesse Livermore.

Now the time is round the corner for all those who have been sitting tight after having emptied their portfolio at Nifty level of 4600. Before we move any further I guess I have some explaining to do with the help of Dow Theory. For the benefit of uninitiated to this particular school of thought, I shall be somewhat explicit in my explanation. But I would also beg some patience from those who are already familiar to the theory.

Markets, like everything else in life, goes around in cycles. There can never be eternal ups and by the same count there cannot also be eternal downs. It means that after a Bull run there will be Bear market and vice-versa. But the most important thing for long term survival is to be able to spot a long term opportunity when it presents itself. The idea is to make an informed decision , weighing various pros and cons, and spot the opportunity as it presents itself.

Dow Theory, which has stood the test of time for over 100 years, suggests that the primary trend has three phases. Bull run begins with Phase 1 where there is Revival of Confidence, then after some correction there is Phase 2 where in there is Improvement in Corporate Earnings, then some more correction, and finally there is Phase 3 or the Euphoric Phase. Euphoric Phase has maximum speculation and inflation of prices. At the culmination of Bull run there will be Bear market with three phases. The 3rd and final phase of Bear run will be characterised by panic selling. As Bear market draws the last blood on the street and completes its cycle, the 1st phase of Bull run starts. And market limps back to life, licking its wounds.

We have just witnessed Revival of Confidence since March 2009. If we consider that as 1st phase of Bull run, we may now expect some decent correction before the 2nd phase of Bull run takes over. For any investor, 2nd phase of Bull run is always the most rewarding phase because it generally is the largest phase in terms of duration and rise in prices. It is always advisable to enter market in the 2nd phase of Bull run since by then there is enough confirmation of intent of the market and correct identification of the Bull run. In contrast the 1st phase of Bull run is always difficult to identify since it could as well be a pullback rally in existing Bear market wherein one can so easily get trapped. Remember that Bull run starts just as the Bear run finishes without any formal and elaborate announcements. You can only identify the first phase of Bull run in retrospect.

Finally the question that begs an answer is this - "what would be a decent correction in Indian markets so that an investor can correctly join the bandwagon for riding the 2nd phase of the current Bull run". Here one can take the help of Fibonacci retracement levels of 38.2% or 61.8% or simply go by 50% correction. Take your pick and invest with gay abandon because 2nd phase of Bull run is round the corner. If you ask me I would suggest that 3500 in Nifty is a safe point to go long. Happy Investing!

Dow Jones In Sluggish Mood

Dow Jones has been cautiously inching north. It is as if it is testing the patience of the world at large. It is playing its cards close to its chest, not allowing anyone to guess its intent. But if you see the larger picture it is playing out as if it was ordained so by the forces of nature. In market you can hide your intent in the short term, but in long term there is no scope for manipulation. Laws of nature have their ways to catch up.

Now in retrospect I can admit that in my blog post dated 31 Jan 09 titled " Stock Market Bottom-Revelations" I had brazenly declared that American markets have reached their bottom. That was the time when every shade of expert on markets was desperately trying to hunt for the market bottom. Today in hindsight it appears that bottom in Dow Jones has actually been established, albeit at a level lower than I had predicted then. However, I had opined that Dow from its bottom will shoot towards 9600. And there it is , romancing the level of 9400 from its bottom of 6450, though its present sluggish attitude suggests drying up of buying interest. What remains to be seen in coming days is whether it will finally touch 9600 as per my prediction on 31 Jan 09 or not.

Level of 9600 for Dow can still be missed as of now, since it has a selling zone pressure between 9000 and 9400. This I had outlined in my post titled "Look out for selling big time" dated 07 May 09. And finally I had homed on to 9500 as the best case scenario tipping-over point for Dow in my post titled "Dow Jones-Prediction For July 2009" on 29 June 2009. Hence presently I am not too very optimistic about Dow achieving 9600 in this run up.

So where does all this leave us now? It just suggests that for Dow to go on a confirmed Bull run , one needs to catch the bull by the horns as it starts its second phase of the run. That usually happens after a meaningful corrective wave comes into play. Wait for this corrective wave to form and then ride the Bull run which can take Dow to 11400 and beyond. Happy Hunting!!

Indian Stock Markets - What Next : Aug 2009

In my last post titled "Budget Time Blues" published on 30 Jun 09, I had predicted that till Union Budget Nifty will hold ground between 4100 and 4500 while Sensex will be range bound between 13500 and 15000. And the indices did just that. But little did I realise then that on day of Budget(06 Jun 09) , Nifty will take a roller coaster ride of the entire range just mentioned. Sample this : on 06 Jun 09 Nifty had a low of 4138 and a high of 4480. Quite unnerving, wouldn't you tend to agree? However that is one characteristic of Indian indices we have to learn to live with.

What surprised me most was the fact that even after decisively breaching 4100 level on closing basis, Nifty didn't capitulate under relentless selling for four days, triggered mainly by market perception that the budget was neither-here-nor-there affair. On the other hand, from a low of 3919 on 13 Jul 09, Nifty has smartly notched up 812 points in three weeks or so. May be I didn't take into account the fact that Dow would go towards its best case scenario tipping-over-point of 9500. This tipping-over point finds mention in my post on 29 Jun 09 titled "Dow Jones - Prediction for July 2009). Since Dow has actually marched north towards 9500, so has rest of the markets and Nifty has not disappointed either.

That brings us to the present question- What Next? Consider the following facts and take an informed decision:-

• I am yet to believe that we are out of the woods. If this is the start of a new Bull run then the first wave has to correct at least by 38.2% (if not 50%) before the second wave can take it to newer heights. I believe we have yet to witness that correction. But in case the correction we witnessed in June-July 2009 qualifies as sufficient correction, then we could see Nifty at 5500 in next to no time.
• Nifty should be watched closely for large volume and price declines. If we find accelerated and sharp fall in Nifty in coming week then it will rush towards its current support of 3920. In that case we may witness formation of a double/triple top pattern , which can drag Nifty to 3300.
• For a strong durable up move, Nifty is yet to take support of 200 day SMA, which is presently hovering around 3300.