Nifty, ABB, Ispat Industries

Shanghai Composite Index has broken major support levels.  The fall in Chinese stock market ensured that other markets could not show gains and most of them ended in red today in spite of almost a breakout type move on Friday.  The fall in 14 day RSI from marginal breakout yesterday, makes us reset the downward sloping trending.  The fight between bulls and bears goes on at this level and it is still difficult to predict who will win.  One thing is certain – in case Nifty breaks the upward sloping trendline, bulls may simply have to run for cover … and fast enough.

Today we shall sell ABB from our paper portfolio as it has moved enough in the last few days and the volumes are not very high. 

We shall include Ispat Industries in our paper portfolio which has shown breakout in price as well as 14 day RSI with very high volumes.

Our paper portfolio would now be as follows -

Nifty, ABB, Ispat Industries

Research Report - Shipping Sector

A good research report on shipping sector covering companies in oil exploration and drilling businesses too.

ICICI Direct Shipping Sector Research Report dated Aug 18, 2009

Research Report - Shipping Sector

Nifty, REI Agro, Fame India

Nifty showed surprising strength on second half of Friday to close at a yearly high of 4732 which is no doubt a bullish sign. RSI too has marginally broken out of its downward sloping trendline.  We are happy that Nifty is moving up which should help our investments also to move up.

Fame India has shown significant gains in our paper portfolio.  Let’s not be too greedy and so we should book some profit there.

I have a feeling that FAME may go further up.  But since we have got decent returns in a short time, I  want to take a small risk.  I want to replace FAME with REI Agro whose volumes have increased in recent days in our paper portfolio.

Our paper portfolio position is as follows now -

Nifty, REI Agro, Fame India

Nifty, NMDC, Aban Offshore

As expected, Nifty is facing stiff resistance at 4700.  And it is possible that Nifty may have to just go down a bit before it makes one last try to breach 4700.  14day RSI is just near the resistance downward trendline.  The flattening of 14day movement is not a very positive sign and the international cues are not likely to support any major upmove tomorrow.  As such I see a downward bias in Nifty for tomorrow though I do not rule out the possibility of Nifty being able to finally break out from the 4700 resistance level.

I plan to sell Aban Offshore today as planned yesterday.  Aban Offshore may continue to move up.  I am taking a chance and trying to see if it corrects to below 1500 and then I will consider whether to buy again or not.

I plan to buy NMDC out of Aban Offshore proceeds.  While 14day RSI has shown advance breakout, the scrip price is just below its downward trendline.  However, considering the strong support it has got from its upward trendline, it may be a risk worth taking.  We shall buy 425 shares at Rs. 373.65 each.

Our paper portfolio now stands as follows -

Note :
TP = Today’s purchase and TS = Today’s sale

Nifty, NMDC, Aban Offshore

Nifty, Alok Industries

The continued FII investment in equities is encouraging.  I expect some volatility intra-day tomorrow. It is still difficult how would market behave after tomorrow’s derivatives expiry tomorrow.    


Our paper portfolio is doing well and I do not see any need to sell anything yet.  I would like to add Alok Industries today in our portfolio.  Again the same storyline.  An upward push from trendline support coupled with an advance breakout of 14 day RSI.

Our portfolio now stands as follows -


I was wondering whether to sell Aban Offshore today since it has moved up 27% in a day.  This move has been accompanied by an extremely strong volume.  Generally in such cases, the trend is very strong and is accompanied by at least one more day of strong move.  Considering the fundamentals of this scrip, even if it falls over next few days, I feel it would again give us opportunity to exit at similar or better prices in time to come. 

We are fully invested at a strong resistance level.  It is not the wisest of things to do.  Well, we are doing it since it is paper portfolio and that we do not mind holding a scrip for 11-12 months to realize around 25% paper profits on our hypothetical investments.

Nifty, Alok Industries

Gitanjali Gems

Our paper portfolio is doing satisfactorily.   Therefore, lets stick to it so long as we are comfortable with the overall market trend or till any scrip shows unusual weakness.  Our philosophy would not be to try to catch the tops and bottoms, it would be to get decent returns without attempting to being super investors.

I would like to add Gitanjali Gems [Rs. 118.45] in our paper portfolio.  It is strong fundamentally and has shown support from upward trendline and moved with volume today.  We shall buy 900 shares of Gitanjali Gems at Rs. 118.45 today.
 

Our paper portfolio would now be as follows -

Gitanjali Gems

Nifty Outlook for Wednesday Aug 26

Nifty showed smart rebound to close above yesterdays close.  I still expect volatility to continue.  As per my yesterdays blog, I would prefer to stick to concentrating on stock specific views rather than market view as a whole and be alert to possibility of market reversals which can create serious dent in our portfolio.

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Nifty Outlook for Wednesday Aug 26

Paper Trading … ICICI Bank

Our existing investments in our paper portfolio are doing fine.  Bharati Shipyard did give up some part of gains today to close at Rs. 182.55.  That's ok as of now.  Rs. 195- Rs. 197 is proving to be a very strong resistance for it and is likely to take some to clear it.  Since the chart pattern is not showing any disarray, scrip is fundamentally sound and market is in uptrend, we would stick with it.

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ICICI Bank [Rs. 767.95]  has taken good support of upward trendline and has shown advance breakout of 14 days RSI.  Though 14 days RSI advance breakout is not always a precursor to good moves, considering that we expect the Nifty to give a good fight at 4700 resistance, I believe ICICI Bank being an index stock shall contribute its might to the bull and bear battle at 4700 level.  We shall therefore buy 150 shares of ICICI Bank at Rs. 767.95.

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Our portfolio now stands as follows -

 

Paper Trading … ICICI Bank

Nifty Outlook for Tuesday Aug 25

Nifty is about to enter a resistance zone of around 4700. This time FII’s are backing it to the hilt. However, breakout from the resistance level may not be that easy. Let’s see. F&O expiry on Thursday can cause some volatility. We will keep our fingers crossed and restrict ourselves to things we understand. What we understand that the index is entering a very treacherous zone. Does not mean that we keep our eyes closed and stay out of market, but it certainly means that we have to be very alert.

Nifty [4642.80]

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Nifty Outlook for Tuesday Aug 25

Paper Trading (Friday Aug 21) ... Aban, Prime Focus

Since we have taken a view that markets should move up in the previous blog, it is but natural that we scout for some good buys. We would be looking out for some scrips which are near their support levels or have recently tested their supports convincingly. The idea is that in case markets have to go up the same too have to go up. While I would always prefer a market outperforming scrip, we would not like to chase a running bus and risk falling. We just want to try to achieve our target of 25% returns on hypothetical sum of Rs. 1 million deemed invested in a year's time.

We should keep in mind, Entry price of a scrip is in our hands. Exit price is in market's hands. So keeping in mind the need to minimize loss in case markets turns against us, we have to try our best to select technically safer scrips.

I would like to Prime Focus [NSE: PFOCUS Rs. 170.85] in our paper portfolio. For details on this company - http://en.wikipedia.org/wiki/Prime_Focus_Group. The scrip is near its upward trendline. I do not know why EPS of the company has suffered significantly. For the April 09 - Jun 09 quarter, it is Re 0.75, which is pathetic. Still I would like to include this scrip in portfolio because it has a visible business and the movie industry should improve over period if there positive cues from economies around the world improve. [Indian movie industry is no longer as dependant on its Indian revenues as it used to be earlier]. We shall purchase 600 shares of Prime Focus.

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Let me make one confession. I also feel butterflies in my stomach when I am putting my free paper money into paper portfolio and my hard earned money in my real life equity portfolio. In my the first case my ego and reputation is at stake and in the second case my ego and my realization of real life target is at stake. But we have to stick our neck out in life. As mentioned by Anthony Robbins in his twitter message recently "The only impossible journey is the one you never begin".

I would like to add Aban Offshore [NSE : ABAN Rs. 1177.10] in my paper portfolio. I have covered this scrip earlier in my blog. I am still positive on the same. If the company is expected to earn around Rs. 80- Rs. 100 EPS in the current financial year without any collateral damage to its earning capacity in subsequent years, then why should it not reach Rs. 1500 [resulting in P/E ratio between 15-20] sometime during this year ? I don't see why. We shall buy 100 shares of Aban Offshore for our paper portfolio.

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The existing 4 scrips in our portfolio are doing fine. I don't see any reason to disturb them now.

Our paper portfolio after addition of PFOCUS and ABAN is now as follows.

Paper Trading (Friday Aug 21) ... Aban, Prime Focus

Nifty Outlook for Monday, Aug 24

Nifty has bounced excellently from the upward trendline support though volumes remain a concern. But the fact that US markets have closed up significantly on Friday, I am fairly convinced that the mood shall be positive in the next few days. I also expect Asian markets to be positive on Monday and thus contribute to the trend. A positive trend in the market would allow strong scrips (technically) to outperform the index and thus give above average returns for the investor.

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Nifty Outlook for Monday, Aug 24

Paper Trading (Thursday, Aug 20)

Bharati Shipyard [Rs. 186.50] has shown great strength and the volumes suggest there is something going on which of course we don't know. And ... we would probably come to know when the game's over. Anyway, the charts are not suggesting divestment of this scrip today. Going forward, I may like to explore any weakness in this scrip price as an opportunity to invest further. No assurances, of course.

Bharati Shipyard [Rs. 186.50]

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Balaji Telefilms [Rs. 58.75] is just doing ok and showing the right strength for sustained move in daily as well as weekly charts.

I would like to introduce ABB [Rs. 691] into our paper portfolio today. It has taken support of the upward trendline and should move up if Nifty continues to move up. Lets buy 150 shares of the same.

ABB [Rs. 691]

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I would also like to introduce Fame India [Rs. 19.50] into our paper portfolio. This loss making scrip ideally should qualify as a Cats & Dogs scrip. Nevertheless, I think it should give good returns in a years time. Does it have potential to reach Rs. 25 anytime during the next year ? I think it has. Lets buy 6000 shares of the same.

Fame India [Rs. 19.50]

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Our paper portfolio therefore stands as follows -
An Important Caveat : Please do not imitate any positions being taken for the purpose of paper trading without consulting your financial advisor. There is no guarantee or assurance that the paper trading would result in even achieving a profit on porfolio (leave alone achieving the desired target).

Paper Trading (Thursday, Aug 20)

Nifty Outlook for Friday, Aug 21

Market movement of Wednesday would have prepared many bulls to go into hibernation but Thursdays gap up opening above the upward trendline would have taken many bears by surprise and shock. Such movements happen many a times in markets when over-anticipation of a movement (up or down) causes reverse movement. Many times such reverse movements from strong support / resistance levels lead to a rally or steep fall in prices.

When there is a lot of fight happening between bulls and bears at certain support or resistance levels, it sometimes makes sense to play less and play stock specific while investing and enter only when the trend is clear. A trend player does not fish for bottoms or tops. He does not need to be a hero ... he just needs to achieve his monetary target. Yesterday's up move has completed a small 'W' pattern which should lead to a continuation of the upmove today also.

[Nifty 4453.45]

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Why do we need to take a call on Nifty when we are just stock specific investors and we do not even go short ? The reason is we need to know when the market is breaking the trend and entering into a different phase. For example, the market is now in an uptrend, if it breaks trendline, it can go into consolidation phase (which it can go even during an uptrend), or it can go into a correction phase. The life is same for you, me or for the market (which reflects the masses) ... when things are in favour, everything works, if not, everything goes against. Of course there are exceptions. What I mean to say is that in case the entire market is going into dumps, the scrips in which we have invested is not likely to enjoy newer highs, it is more likely to fall with the market, albeit to a lesser extent in percentage terms than the market. The same applies vice versa also.

Nifty Outlook for Friday, Aug 21

Paper Trading

Bharti Shipyard showed an extraordinary upward movement to Rs. 176.75 from Rs. 158.85 yesterday with very high volumes. If this scrip is available around 165-168 in the next one or two days, it should still be a good buy.

Balaji Telefilms showed a lower high today and a higher low today but the entire trading range was above 5dma.

I am of the view that the market shall be weak in next few days. If the market bounces up tomorrow and closes above todays high, it would merit review of existing views.

Since I am negative on market, we should not take any fresh positions.

The paper portfolio as on date is as follows -

Paper Trading

Nifty Outlook for Thursday, Aug 20

Today 10dma and 5dma converged but 5 dma could not cross or promise crossing of 10dma because of a closing towards the lower side of the trading range today. I am quite bearish about Nifty now. I expect Nifty to fall around 180-200 points in the next few days.

[Nifty : 4394.10]

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Caveat : No views are permanent in market. The views based on technicals have to change based on actual observations of developing chart price and volume behaviour and patterns.

Nifty Outlook for Thursday, Aug 20

Paper Trading, Bharti Shipyard

Balaji Telefilms has done well today. Closed at Rs. 60.30 (up 8.84%). Makes sense sticking with it for some time as it is outperforming index.

Lets add Bharti Shipyard to our paper portfolio. It is at Rs. 158.85. It is fundamentally sound also. Apparently this scrip is getting low discounting because it would financially overstretch itself if it continues to slug it out against ABG Shipyard in acquisition of control of Great Offshore Ltd. Further, it does not seem to have order book lasting longer than a couple of years. Thinking about it, do I still see it touching around Rs. 200 (25% above current cost) in one years time ? Yes, I do. Is this recession going to last for another two years ? No, I do not. Then, lets buy this script today (700 shares @ Rs. 158.85) on paper.

Bharti Shipyard [Rs. 158.85]

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Our paper portfolio breakup now would be -

Paper Trading, Bharti Shipyard

Nifty Outlook for Wednesday Aug 19

Nifty took support of the upwared trendline but the intra-day high stopped short of 5dma. Today's low was higher than the recent low of 4359.40 on Aug 12. The market can move either ways from here. I am keeping my fingers crossed for the time being. Investor needs to be very careful.

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Nifty Outlook for Wednesday Aug 19

Paper Trading, Balaji Telefilms

One way to learn about equity markets is to trade on paper only, that is without using real money. We will start a paper portfolio today with an initial capital of Rs. 1,000,000. Our entry and exit shall be based on proper reasoning as an investor. Our target would be achieve a 25% return on intial capital within 1 year. This percent includes 2% towards brokerage costs (buy and sell) and 3% towards slippages (when targetted in actual life). The target would have to be achieved on long only basis (since as an investor, we would not be shorting) irrespective of the overall markets. All purchase and sale shall be considered at current day's close price. The portfolio shall not contain more than 10 scrips. However, there would not be any condition as to the cash component of the portfolio. Lets start the first year journey towards our goal.

I am quite positive on Balaji Telefilms [Rs. 55.40]. It has started outperforming the index recently and the chart patterns are also bullish with higher volumes.

[Balaji Telefilms Rs. 55.40]

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We shall therefore paper purchase 2000 shares of Balaji Telefilms at Rs. 55.40 for Rs. 110,800. Our paper portfolio as on today would be as follows -

Paper Trading, Balaji Telefilms

Market Outlook for August 18, 2009

Just when we were almost convinced that the markets would reach for earlier highs and then newer ones, it got swept off its feet. It is still above the upward trendline. But now I would to stick my neck out and state that we are due for a larger fall though it may not happen tomorrow. I think professionals would use higher levels tomorrow around 4500 to exit their longs and create certain stock specific shorts. I think an investor should wait and watch rather get trampled in this madness. Many frontline stock are showing weakness. If any stop loss gets triggered, please follow it.

Nifty[4387.90]

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Market Outlook for August 18, 2009

Bharati Shipyard [Rs. 158.50] Revisited

No major movement in the last 2 weeks. Still looks promising on charts.

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Bharati Shipyard [Rs. 158.50] Revisited

India Infoline [Rs. 135.20] Revisited

India Infoline thought to be a momentum play, I expected it to show 5-10% gains. But it has remained more or less at same level after taking support of upward trendline below 65dma. Its a wait and watch for time being. In case it breaks trendline on the way down, it would be a square off scenario.

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India Infoline [Rs. 135.20] Revisited

Crompton Greaves [Rs. 282.60] Revisited

Crompton Greaves went down to a low of Rs. 261 which is higher than its previous low of Rs. 255 and it currently at 282.60 taking support of upward trendline below 65dma.

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Crompton Greaves [Rs. 282.60] Revisited

Wockhardt [Rs. 163.85] ... New 200 day high

Worst seems to be behind Wockhardt if we have to considering investment in this scrip. It has reached a new 200 days high.

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Wockhardt [Rs. 163.85] ... New 200 day high

Nifty Outlook for Friday, Aug 14

Contrary to my expectation, the Nifty rallied above 4563 and closed at a much higher level of 4605 supported by FII buying. Though I had expected a sharp recovery to happen, I had expected after a little more of correction. And this is the reason why I had mentioned about the view to be taken in case market crosses above 4563.

The market would now try to scale above 4700 with conviction. Though I do not think that it would be able to maintain this velocity shown in last two sessions. In case Nifty is able to scale above 4700 in next few sessions, the Nifty's next target would be 4900-5000. You need to be sure what you are buying in this market. The market is purely liquidity driven and most investments would now be a momentum play.

Nifty Outlook for Friday, Aug 14

Provogue [Rs. 59.40] ... Momentum gains !

Provogue is not a scrip which I would consider as a strong fundamental scrip. However, it stuck at upper circuit yesterday and the chart pattern looks promising for good gains if you can enter today even at say Rs. 60-61. Again 65dma support with strong trendline support.

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Provogue [Rs. 59.40] ... Momentum gains !

Ranbaxy [Rs. 289.45] ... Looks promising

Ranbaxy has taken support of 65dma which again coincides with the upward trendline with increased volumes. If you are looking for a 20% gain over a year, I think this scrip definitely has the potential to provide that gain from this level.

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Ranbaxy [Rs. 289.45] ... Looks promising

Nifty Outlook for Thursday, Aug 13

As expected, Nifty fell today (Wed, Aug 12). It fell more than 110 points intraday but recovered most of it to close at 4457 (only 14 points down than yesterday). Inspite of such sharp reversal intraday, today's high was lower than 5dma. Ideally, the market should open up tomorrow and try to reach 4563. I do not see market going above that level tomorrow or in immediate future. I am still not convinced of the trend as I think the market has not sufficiently corrected itself post a confirmed double top.

However, I would like to add a caveat that in case the market closes above 4563 then it can mean start of a V-shaped reversal upwards.

Nifty Outlook for Thursday, Aug 13

Nifty Outlook for Wednesday, Aug 12

Nifty has closed 34 points above its previous close today, (Tues Aug 11). However, the high was lower than 5dma and the low was lower than yesterdays low. Though we get an impression that it may be able to get support around 50dma or 65dma, it is still early to say that with conviction. I expect the market to open tomorrow with a down gap and may not be able to go above 4510 tomorrow. I feel the Nifty should fall further by at least 100-130 points. Depending on the pattern which charts make while falling, it would be easy to take a call on further trend.

Though I do not think this will happen tomorrow, a high above 4563 can definitely mean that the market may actually change trend.

Nifty Outlook for Wednesday, Aug 12

Nifty Outlook for Tuesday August 11

Nifty just made a double top last week [Jun 12 : 4693 and Aug 4 : 4373] after failing 4 times previous week to conclusively break past 4700 and has closed lower than previous week low today. I do not think markets can turnaround to higher ground just yet even if it has to. Though the tech stocks are strong, they will take some time out to consolidate while other stocks correct themselves to required levels. As such I do not think buying stock would be a good idea till we know how much market would like to correct.

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Nifty Outlook for Tuesday August 11

Nifty

Even though the US markets ended on a positive note on Friday, I am not very optimistic about Indian Markets on Monday. I think a higher open on Monday, if it happens and any further upmove during the day should be used to exit from profitable positions for re-enter at lower levels intra-day or in next 2-3 days. However, if Nifty shows a high higher than 4592 on Monday (which is highly unlikely), then it may mean a scenario reversal for a strong positive upmove commencing Monday.

Nifty

Balaji Telefilms [Rs. 55.30] ... Higher volumes

Balaji Telefilms is passing through a lean phase. I understand only 2 of its TV Serials are doing fine. However, the volumes have increased. The scrip chart shows a demonstrated trendline. Scrip seems to be aiming for higher levels and there is support coming sporadically. The volume bursts have been with price moving higher. Obviously someone seems to be buying. EPS for Q1FY10 is Rs. 1.37

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Balaji Telefilms [Rs. 55.30] ... Higher volumes

Bharati Shipyard [Rs. 166.25] ... Making the right moves

It has formed a demonstrated trendline. Taken its support. Now it has begun to show signs of life again. And with good volumes. The support does not come only from trendline, it comes from upward moving 65dma also. Looks to be set for making good upmove. Diluted EPS for Q1FY10 is Rs. 11.68.

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Bharati Shipyard [Rs. 166.25] ... Making the right moves

Aban Offshore [Rs. 1038.85] ... Strong technicals

The scrip is considerably up from its lows of Rs. 221 earlier during the year. It has a demonstrated supporting trendline and another demonstrated resistance trendline which has been broken. The volumes in this scrip are significantly higher in the past 4 months. There have been certain positive research reports inspite of negative news about some idle rigs. However, it is expected that oil offshore businesses are likely to do well. It is also heard (it may be a rumour) that the Company plans to raise capital to retire some debt. Even if I ignore the fundamental news on this scrip, breaking of resistance trendline with consistently higher volumes is a good sign for investment.

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The EPS of Aban Offshore for Q1FY10 is Rs. 20.63.

Aban Offshore [Rs. 1038.85] ... Strong technicals