Options writing

Options writing: The money making tool used by professionals

What is Options writing?
We all know, about options carry a price tag for respective strike prices. Now, this price is dependent on Market volatility and time remaining for expiry.

Higher Volatility + full month remaining for current month expiry = Maximum value of Option

This means, we have to keep an eye on open interest for the strike price and also the number of trading days left for expiry.

Example:

 Market closing price = 8338
 Market lot size for Nifty = 25


Here for Strike price of 8400 Call option, the open interest is 3,968,850. The premium (price tag) for this strike price of 8400 CE is Rs. 85.15 (as of 5th Nov)

Now when market approaches closer to 8400, the price value of this CALL option contract increases.





Here for Strike price of 8000 Put option, the open interest is 5,548,850. The premium (price tag) for this strike price of 8000 PE is Rs. 15.45 (as of 5th Nov)

Now when market approaches closer to 8000, the price value of this PUT option contract increases.


Now, the professional Option writer, actually Sell the Call or Put option at desired level. He/She then waits patiently for the price to come down, eventually to Rs0.05 at the day of expiry.
Thus he /she earns on the depreciated amount just like short trades.

viz. If an option writer now sells 8400 Call at 85.00 and if market expires around 8200-8250 then on day of expiry, this value of 8400 Call will become Rs.0.05 making him earn (85-0.05)X 25 =  2100 per lot (approx).

Thus, option writing requires precise knowledge of where the market will go in a month and eventually earn on it.  He/She can exit any time by Buying the contract (which he sold earlier).

Risk: The writing of options carries high risk. The profit is limited whereas the loss is unlimited.

A friend of mine on Money control message board has nicely explained strategies to write options successfully.
{here ATM = At the money options means Strike price = Spot price
OTM = Out of the money options means Strike price = far from Spot price.

Example: Spot price = 8338. Then ATM Options will be of 8300 Call and 8300 Put and also 8400 call and 8200 Put.
The OTM options will be 8500 Call and 8100 Put. Deep OTM options will be call options > 8500 and Put options <8100}

November Series - Chapter 3

Tata Steel is in near term pressure

Range: Tata steel has high supply at 500 and strong support near 460 zone.

The breakdown below 460 will lead Tatasteel to 428 from where a sharp recovery is expected.
As of now, Tata steel is highly overbought because of recent run-up from 436 to 490 levels.

Keep eye on Tatasteel and buy close to 460 for swift rally.

However its a best and a risk free buy at 430.

Strategy: the 460 Put can be bought at 7.4 for a target of 10 to 12. (Lot size 500)
The 490 Call at 11.5 can be written off to gain 5500 profit by expiry.
Risk: For Call writing, risk is good results on 12th Nov. A production increase of greater than 3% will lift the stock to 485 with ease. 

Nifty November Range

This is NIFTY range for November series.
Huge open interest is active on both these levels. On anticipation of rate cut, Nifty is riding a strong wave and it conquered both 8200 and 8300 in a single session!!

Now, as more bears are adding weight to Nifty and bank Nifty, by end of month when these Bears will cover their shorts, Nifty will fire again!!

As of now, if RBI does not cut rates (even when Mr. Arun Jaitley has shown inclination for it) then Nifty will crack open to 8100 too swiftly. Else with rate cut on!! we will see maximum 150 points from here as this news is factored in 8300 levels.

Strategy: Buy few lots of Nifty 8100Put at 8320 and few at 8440 (if it comes)
then exit these options at decent profit levels of 8145-8120.
Once market reaches 8120, I will analyse charts and market scenario to comment on new strategy!.

It was observed that with Nifty moving from 8160 to 8330, Banks and majority participants (8000 to 8150) looked tired. So the fall will be swift enough. Only to resume it's journey to get aligned on the major trend!!

November Series trades - Chapter 2

Trading Ideas for November 1st week

Strategy 1 : When Nifty is around 8180-8210, buy Nifty Nov 8100 PE.

Strategy 2 : When Nifty is around 8090-8100, buy Nifty Nov 8400 CE.

Tip: Buy Maximum 100 quantity (4lots only). Aim for maximum 70% returns. Book half of your holdings when you get 50% returns on invested capital.

Risk analysis: If nifty closes below 8050 for 2 days then doors for 7700 will be open. If 8080 is protected, then doors for 8280-8370 will be opened.

Buy Call options close to 8100-8080 and Put near 8200 levels.

November Series Trades - Chapter1

In November series the lot size Nifty's and Stock's contracts is going to change as follows:

So when the market opens on Fri, 31st if you held 1000 of Nov TataMot (1 lot) from 30th, it will still be 1000 of Nov TataMot but 2 lots of 500. Margin again will drop proportionately.

This decreased lot size will reduce the margin required and make the entry barrier lower for those retail traders who earlier couldn’t participate in F&O due to higher margin requirements. The increased participation should help in better price discovery and also improve the market depth.

Other stock's Lot sizes remain same.

Part 2: Trading in F&O - the high risk and high reward equation!

Basics of Options trading:

1.       Trading cycle and Lot size remains same in options.

2.       The major difference in margin required and intrinsic time value.

3.       The Purchasing a futures contract requires an up front margin and normally involves a larger outflow of cash than in the case of Options, which require only the payment of premium.

4.       A futures contract carries unlimited profit and loss potential whereas the buyer of a Call or Put Option's loss is limited but the profit potential is unlimited.

5.       Futures are a favourite with speculators and arbitrageurs whereas Options are widely used by hedger.

Examples:

NIFTY 30Oct2014 CE 8000.00

34.65

Here, We are considering Nifty CALL option of October month of Strike price 8000. The spot being at 7991.35 (27^th Oct 2014). The Value of this CALL option of 8000 is trading at 34.65. So at 50 Lot size (fixed) the cost to purchase is 50X Rs.34.65 = Rs.1,732.5 (Brokerages + Taxes extra)

NIFTY 30Oct2014 PE 7700.00

1.65

Here, We are considering Nifty  PUT option of October month of Strike price 7700. The spot being at 7991.35 (27^th Oct 2014). The Value of this PUT option of 7700 is trading at 01.65. So at 50 Lot size (fixed) the cost to purchase is 50 X Rs.1.65 = Rs.82.5 (Brokerages + Taxes extra)

JSWSTEEL 30Oct2014 CE 1300.00

2.35

Here, We are considering JSWSTEEL CALL option of October month of Strike price 1300. The spot being at 1233 (27^th Oct 2014). The Value of this CALL option of 1300 is trading at 2.35. So at 250 Lot size (fixed) the cost to purchase is 250 X Rs.2.35 = Rs.587 (Brokerages + Taxes extra)

JSWSTEEL 30Oct2014 PE 1200.00

7.25

Here, We are considering JSWSTEEL  PUT option of October month of Strike price 1200. The spot being at 1233 (27^th Oct 2014). The Value of this PUT option of 1200 is trading at 7.25 So at 250 Lot size (fixed) the cost to purchase is 250 X Rs.1.65 = Rs.1812 (Brokerages + Taxes extra)

6.       You may observe that, owning a options trade costs very less compared to a futures trade.

7.       The max risk is your capital will become zero! While profit is unlimited!

8.       The percentage gain in options trade can be 0.1% to 1000% or even 10,000% in a day!

 Example on 27^th Oct, Put option of DLF of 100 strike price 

DLF 30Oct2014 PE 100.00

1.25 up by 0.55 (+78.57%)

9.       The brokerages on options trade is fixed per lot. Usually Rs.50.

10.   Thus, when you a buy a Nifty Call or Put option, your break even point (after which your profit starts) is Cost Rs.50 divided by lot size viz 50 = Rs.1. So If you buy an option at Rs.20, then as soon as it becomes Rs.21 and above, your profit starts J

11.   Thus, for higher lot size of stocks your break even point is closer. Example for JSWSTEEl, your break even point (after which your profit starts) is Cost Rs.50 divided by lot size viz 250 = Rs.0.2. So If you buy an option at Rs.20, then as soon as it becomes Rs.20.20 and above, your profit starts J

12.    The major risk in options trading is time decay!! It means when the expiry date comes closer (last Thursday of month) the value of Option (call & put both) reduce. This reduction in value is seen every day around 12pm and in last week its highly significant.

13.   Hence it is wise to sell off the Options trade position in a day or two.

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Trading in F&O - the high risk and high reward equation!

Trading in F&O is a ‘calculated risk’ game.

In this segment, a higher degree of conviction, discipline and tolerance level is required. Oh yes, the EGO should be limited too.

Basics of Futures trading:

1.     In futures the lot size of stocks and index is fixed, so you buy in LOTS.  Link to Lot size and day wise Margin

2.    The capital requirement varies from stock to stock but a healthy balance of Rs.1Lk at the least should be set aside for trading in one lot! This lot should of Rs. 30,000 to Rs.60,000 cost.

3.    This difference of 40,000 or so will act as cushion when traded contract price falls against your expectation.

4.   Trading cycle: Futures contracts have a maximum of 3-month trading cycle - the near month (one), the next month (two) and the far month (three). New contracts are introduced on the trading day following the expiry of the near month contracts. The new contracts are introduced for a three month duration. This way, at any point in time, there will be 3 contracts available for trading in the market (for each security) i.e., one near month, one mid month and one far month duration respectively.

5.   Expiry day: Futures contracts expire on the last Thursday of the expiry month. If the last Thursday is a trading holiday, the contracts expire on the previous trading day.

6.    The contract of future looks as follows

a                   a) JSWSTEEL 30Oct2014 which means, the future of stock “JSWSTEEL” will be valid till 30th Oct 2014.

b)  NIFTY 27Nov2014 which means, the future of index “NIFTY” will be valid till 27th Nov 2014.

7.    On the last day of expiry, we should “SQUARE-OFF” (sell) our positions.

8.    The position can be created in two forms viz LONG when you assume that the price will rise from current levels and SHORT when you assume that the price will fall from current levels.

9.    The current market price is known as the SPOT Price. The future price when trades above the spot level, we say “the future is trading at ** points premium to spot”. And when the future price trades lower than the spot price, we say “the future is trading at ** points discount to spot”.

10.The overall number of positions in the particular scrip (Index or stock) is called as Open interest.

11.When open interest increases to a significantly high level (80%-90%) SEBI puts a ban on trading on that scrip. Usually, HDIL easily attracts Ban level. In such case, buying is prohibited and attracts fine in addition to brokerages and taxes.

12.The changes in open interest can be read in following manner:

a.       Increase in open interest and Increase in future’s price = Long positions created.

(Bullish scenario)

b.      Increase in open interest and Decrease in future’s price = Short positions created.

(Bearish scenario)

c.       Decrease in open interest and decrease in future’s price = Long positions squared off. (Bearish scenario)

d.      Decrease in open interest and Increase in future’s price = Short positions squared off. (Bullish scenario)

    13.   For example, if trader A buys 10 futures contracts from trader B, then open interest is 10. If another trader X buys 20 futures from trader Y, then the open interest accordingly adds to 30.
But, if A unwinds his position of 10 futures, then open interest will decrease by 10, because these contracts cease to exist. Instead, if A sells these to another trader C, then the open interest remains unchanged since it is C who holds the contracts now 

Price	Open Interest	Interpretation
Rising	Rising	Market is Strong
Rising	Falling	Market is Weakening
Falling	Rising	Market is Weak
Falling	Falling	Market is Strengthening

  

      14.   Increasing open interest means that new money is flowing into the marketplace. The result will be that the present trend (up, down or sideways) will continue. 

Declining open interest means that the market is liquidating and implies that the prevailing price trend is coming to an end. A knowledge of open interest can prove useful toward the end of major market moves.
A leveling off of open interest following a sustained price advance is often an early warning of the end to an up-trending or bull market.

   15.   There are various strategies in trading in Futures segment. Which will be covered later.

The opportunity in e-commerce business of India

RS SOFTWARE: The e-payment expert!

The e-commerce business of India is set to grow multi-fold in next five years. Owing to this great opportunity, I propose to buy RS Software around Rs 630 to 670 zone for a long term span. Currently trading at Rs.685 (25th Sept 2014)

About E-commerce in India:

India's e-commerce market was worth about $2.5 billion in 2009. It went up to $6.3 billion in 2011 and further to $16 billion in 2013. It is now expected to grow as much as $56 billion by 2023, which will be 6.5% of the total retail market, as quoted by eMarketer. 

About RS Software: It commands a healthy 16% Net profit margin.

• Steady growth in revenues annually:
– USD 25 M (INR 1011 M) - 07-08
– USD 32 M (INR 1495 M) - 08-09
– USD 36 M (INR 1665 M) - 09-10
– USD 44 M (INR 1993 M) - 10-11
– USD 55 M (INR 2650 M) - 11-12
– USD 59 M (INR 3225 M) - 12-13
– USD 64 M (INR 3892 M) – 13-14

• RS Software has a record year, posts highest ever revenues and profit
• Company declares FINAL DIVIDEND of 25%, taking the TOTAL DIVIDEND for the year to 60%.
• Revenues grow by 21%, reaches Rs 389 Cr in FY 13-14 (from Rs 323 Cr in FY 12-13)
• Profit Before Tax jumps to Rs 77 Cr, up by 56%, from Rs 50 Cr in FY 12-13
• Profit After Tax reaches Rs 53.6 Cr in FY 13-14, up by 41%, from Rs 37.9 Cr in FY 12-13
• EPS increases by 32%, from Rs 32.66 in FY 12-13 to Rs 43.01 in FY 13-14
• Book Value increases by 38%

Q1 Highlights FY 2014-15

• PAT at Rs 16 Cr, signifying a jump of 48% for Q1 Y-o-Y
• EPS at Rs 12.76 registers growth of 40% for Q1 Y-o-Y
• Book Value at Rs 143.34, hike of 25% for Q1 Y-o-Y
• INR Revenues reach Rs 101 Cr, growth of 10% for Q1 Y-o-Y
• Company has declared dividend of 10% for Q1 FY 15

Credit rating upgraded to CARE A in FY 13

Technical Chart pattern:
RS Software is moving in an upward rising channel. 
Short term Elliot wave reading:
EW wave 1: 242 to 409 = 167 points
EW wave 2: 409 to 376 = 33 points viz 19% retracement
EW wave 3: from 376 onwards. Expected to reach (1.618minimum)X (EW wave 1 magnitude)
   = 1.618 X 167 = 270. Thus it should be around 646.
Extended EW 3 should be 2.67X167 = 446 points viz 822level!  It went to high of 830!!

EW wave 4: Stock made a high up to 830 had retraced to 685 (currently) viz 185 points.

EW wave 5: Expected to begin from either 670 or 680 (max at 630). Which should take it to 900 levels.

Further, after spending two weeks around 800-900 zone , the stock should resume its upward journey with new 5 waves making it reach 1500 by December 2015!! that's 121% returns.

On a longer scale of 3 years+ the stock will be a blockbuster and may even be in F&O segment after clocking a market cap of 4000Cr. Current market cap is 850Crs.

Market leader in media stocks: ZEEL

Zee Entertainment Ltd with a market cap of 27000Cr is quoting at 266 levels at present. It has been consolidating in band of 260 to 300 since late Nov 2013 to May 2014. A breakout past 300 this time can take it to great highs. The stop loss should be kept at 250 level (closing basis).


Risk reward ratio is favoring buyers now. One should initiate buying at 266 and add more at 260-62 if it comes for a target of 350+.

Positive trigger would be more FDI in media sector. FIIs have increased the stake in ZEEL from 42% in June'13 to 48% by Mar'14. This shows undertone is bullish and good run is expected in near future!

Gudi Padwa Special: Accelya

Accelya Kale

Buy this wealth creator on Gudhi Padwa today at 758-760 levels with a small risk stop loss of 724 for a near term target of 1050 to 1200 once it closes above 825-835 levels for two days.

Accelya voted as 'IT Company of the Year' for 2014

Its in business of providing IT-solutions to Airways sector. The current market capitalization stands at Rs 1,128.43 crore.The company has reported a consolidated sales of Rs 73.31 crore and a Net Profit of Rs 20.3 crore for the quarter ended Dec 2013. Yearly revenue is around Rs.285-290 crore and Net profit at Rs.80 crore, a margin of 28%!!

Promoters stake is at 74.66% while FII have less than 0.5% stake. This means risk of falling when Nifty goes deep in red is minmal. Also, as promoters hold a high stake, just 1% more rise in stake and it becomes a delisting candidate. So to continue the current position, promoters need to sell their stake which should be 25% to 30% in premium to current market price of 760, which comes around Rs.950 per share.

Short term call: Glenmark

Glenmark Pharma : Largest pharma in terms of revenues

The share of Glenmark pharma can prove to be a wealth creator at this point of time. The stocks looks ready to find a bottom in coming 1st week of April. Around 540-45 is a strong support which can give the stock a bounce to 590 levels.
Above this, we can see 630-680 levels coming in period of 6months.

So go ahead and Buy with a sound stoploss of 540 on closing basis for a target of 590 in 2-3 weeks.

Medium term call: MCX

MCX INDIA

The charts of MCX shows a good consolidation with 500 as a mean level. Currently its trading around 487-490. This is a good level to buy this highest profitable exchange.

MCX has 87% market share in the Indian commodity derivatives market.
Also, the story of stake sale of MCX through FT is due in April month. CME Inc (its a big shark) and BSE of India are two of the ten interested buyers of MCX stake.
This should give MCX rich valuation of 4000Cr to 5000Cr which translates to 800 to 1000 per share of valuation. A 22 to 27 of EPS is appropriate valuation.


550 is the breakout point, above which it will try to test 625-50 levels and so on..
One weekly close above 500 should mean that the stock is ripe to move up.

  The stock has shown descending triangle pattern which is bearish, so caution is advised in opening up new position.
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1 year charts speaks about a profitable opportunity ahead:

A strong break out above 500-550 should take it to 1100+ levels!! a multi-bagger in making guys.. the risk is too low and rewards too good to be true to act upon!

Weekend Show: M.A. Yusuf Ali, Leading Business man and philanthropist

 Yusuffali Musaliam Veettil Abdul Kader 
Born: 15 November 1955
 in Nattika, Thrissur district 

Awards: Padma Shri (2008)
Pravasi Bharatiya Samman Award (2005) 
Commander of the Syriac Orthodox Church (2004)
  ___________________________________________________________________________
Yusuffali was only 16 years old in 1973 when he embarked on a 14-day voyage to join his family members who were running a small trading establishment in the Abu Dhabi souk.

Yusuffali went on to become a regular supplier of frozen foods and other items to expatriates from Western countries. Soon he forayed into the wholesale distribution of frozen foods in poultry and meat.

The turning point came when he opened the first retail outlet in Abu Dhabi.

The Kuwait-Iraq war was under way when Yusuffali decided to take the risk of investing more money in the business.

His venture not only turned out to be successful but also won him the support of the rulers as he was one of the very few who stayed back and made investments, while others were leaving.

The big expansion came in 2000, when he opened the first hypermarket in Dubai. Soon, the LuLu brand spread all over the UAE, Oman, Kuwait, Bahrain and Saudi Arabia.
___________________________________________________________________________________
Incidentally, MA Yusuffali has a number of other banking stocks in his portfolio such as Federal Bank, Dhanlaxmi Bank and Catholic Syrian Bank. He holds a massive chunk of 315.77 lakh shares of Federal Bank (3.69%) worth a whopping Rs. 264 crore. He bought the shares in July 2013 and is its’ single largest shareholder. He has 52.90 lakh shares in Dhanlaxmi Bank (4.88%) worth Rs. 20 crore. He also has a 4.99% stake in the unlisted Catholic Syrian Bank

Politicians from his home state describe him as the 'unofficial ambassador' of Kerala in the Gulf region.

His role in settling disputes between Kerala and Dubai over the SmartCity project — an IT special economic zone being set up in Kochi in a joint venture between the Kerala government and a subsidiary of Dubai Holdings — or his role as facilitator of investment or as the provider of jobs to nearly 24,000 Malayalees have all contributed to this title.

In Kerala, the LuLu group's first investment was a convention centre in Thrissur at a cost of Rs 145 crore. The LuLu Shopping Mall and Marriott Hotel in Kochi have been built at a cost of Rs 1,600 crore.

The two other projects of the LuLu group in the state are a flight catering service at a cost of Rs 65 crore and the Airport Marriott Hotel in Kochi at a cost of Rs 150 crore.

In other words the group has so far invested Rs 1,960 crore in projects in Kerala.

Apart from this, the LuLu group is one of the leading investors in the equity of a local bank and Cochin International Airport Ltd. 

Weekend Show: Lakshmi Mittal - Success Story

Born: June 15, 1950, Sadulpur, Rajasthan, India.

• Occupation: Chairman & CEO of Arcelor Mittal
• Net worth: $16.7 billion USD (2014)
• Fortune: Inherited and growing
• Source: Steel
• Industry: Manufacturing
• Website: mittalsteel.com
• Marital Status: Married, 2 children
• Education: St Xavier's College Calcutta, Bachelor of Arts / Science.
• Award: Padma Vibhushan (2008)

 Lakshmi Narayan Mittal (born June 15, 1950) is a London-based Indian billionaire industrialist, born in Sadulpur Village, in the Churu district of Rajasthan, India, and residing in Kensington, London. He is the fifth richest person in the world, with a personal fortune of US$32.0 billion according to Forbes 500.The Financial Times named Mittal its 2006 Person of the Year. In May 2007, he was named one of the "100 most influential people" by Time magazine.

Lakshmi spent his first years in India, living with his extended family on bare floors and rope beds in a house built by his grandfather. His family, from the Marwari Aggarwal castel, was from humble roots; his grandfather worked for the Tarachand Ghanshyamdas Poddar firm, one of the leading Marwari industrial firms of pre-independence India. They eventually moved to Calcutta where his father, Mohan, became a partner in a steel company and made a fortune.

Lakshmi was a keen student and his classmates knew him as a sharp student who was good with numbers. He graduated at the top from St. Xavier's College in Calcutta (Now known as Kolkata) with a Bachelor of Commerce degree in Business and Accounting in 1969.

Lakshmi Mittal began his career working in the family's steelmaking business in India, and in 1976, when the family founded its own steel business, Mittal set out to establish its international division, beginning with the buying of a run-down plant in Indonesia. Shortly afterwards he married Usha, the daughter of a well-to-do moneylender. In 1994, due to differences with his father and brothers, he branched out on his own, taking over the international operations of the Mittal steel business, which was already owned by the family. The family of Mittal never spoke to the public about the reasons for the split, although, there were rumors it was due to financial instablity between the brothers.

Controversy erupted in 2002 as Plaid MP Adam Price exposed the link between U.K. prime minister Tony Blair and steel magnate Lakshmi Mittal in the Mittal Affair, also known as

'Garbagegate' or Cash for Influence. Mittal's LNM steel company, registered in the Dutch Antilles and maintaining less than 1% of its 100,000 plus workforce in the U.K., sought Blair's aid in its bid to purchase Romania's state steel industry. The letter from Blair to the Romanian government, a copy of which Price was able to obtain, hinted that the privatisation of the firm and sale to Mittal might help smooth the way for Romania's entry into the European Union.

The letter had a passage in it removed just prior to Blair's signing of it, describing Mittal as "a friend."

In exchange for Blair's support Mittal, already a Labour contributor, donated £125,000 more to Labour party funds a week after the 2001 U.K. General Elections, while as many as six-thousand Welsh steelworkers were laid off that same year, Price and others pointed out. Mittal's company, then the fourth largest in the world, was a "major global competitor of Britain's own struggling steel industry, Corus, formerly known as British Steel." Corus and Valkia Limited were two of the primary employers in south Wales, particularly in Ebbw Vale, Llanwern, and Port Talbot.

Since 2005, Mittal has been the richest person residing in the United Kingdom. He is the President of the Board of Directors and CEO of Arcelor Mittal; Arcelor Mittal is the world's largest producer of steel, with assets in France, Belgium, Romania, Bosnia-Herzegovina, South Africa, Poland, Czech Republic, Indonesia, Kazakhstan, Canada, Bulgaria, United States and Brazil. On July 13, 2005 it was announced that he had donated £2 million to the Labour Party, and on January 16, 2007 it was announced that he had donated a further £3 million. Although Mittal has been living abroad for many years, he claims he will remain an Indian.

In March 2007, Mittal was reported to be the 5th wealthiest person in the world by Forbes Magazine (up from 61st richest in 2004). The Mittal family owns 44% of Arcelor Mittal, the world's largest steel company. His residence at 18-19 Kensington Palace Gardens was bought from Formula One car racing boss Bernie Ecclestone in 2004 for £57.1 million ($105.7 million), the world's highest price ever paid for a house. Formerly, this house was the residence of Paul Reuter, the founder of the Reuters news service.

Mittal has two children. His son, Aditya Mittal, is the CFO of Arcelor Mittal. Mittal paid over £30 million to host his daughter Vanisha's wedding celebration in Vaux le Vicomte on 22 June 2004 and an engagement ceremony at the Palace of Versailles on 20 June 2004, the world's most expensive wedding ever. He even hosted a Bollywood night where superstars like Rani Mukerji, Saif Ali Khan, Shahrukh Khan and Aishwarya Rai performed. Kylie Minogue also sang on stage.

Mittal's house in Kensington, London is decorated with marble taken from the same quarry that supplied the Taj Mahal. The extravagant show of wealth has been deemed the "Taj Mittal."

Recently, Mittal has emerged as a leading contender to buy Barclays Premiership clubs Wigan and Everton, but has so far refused to comment.

As of 8th October 2007, the 44.79% stake which the Mittal family have in Arcelor-Mittal was worth $47.159 billion dollars, down from $48.4 billion in late September. This makes him the world's 5th wealthiest man after Bill Gates, Warren Buffet, Carlos Slim and Ingvar Kamprad. As of 11th October 2007, his stake was worth $50.56 billion dollars, making him the fifth person in the world to have more than $50 b wealth.

After witnessing India win only one medal, bronze, in the 2000 Olympics, and one medal, silver, at the 2004 Olympics, Mittal decided to set up Mittal Champions Trust with U$9 million to support 10 Indian athletes with world-beating potential.

For Comic Relief 2007, he matched the money raised (~£1 million) on the celebrity special BBC programme, The Apprentice.

 

Medium Term Call: SKFINDIA

The bearing's giant is the next medium term pick. 

SKF is a leading global supplier of bearings, seals, mechatronics, lubrication systems, and services which include technical support, maintenance and reliability services, engineering consulting and training. SKF is represented in more than 130 countries and has around 15,000 distributor locations worldwide. Annual sales in 2012 were SEK 64,757 million (1SEK, Swidish Krona = INR9.5) and the number of employees was 46,775. www.skf.com
 In India, SKF India Ltd has 3 manufacturing centres catering to Two-wheelers, Automotive, Industrial & Electrical sectors. It is preffered bearings supplier of Maruti, it has received award from Dun & Bradstreet for being Top Indian company in bearing's sector!

SKF has seen huge accumulation by HDFC mutual fund family along with Reliance mutual fund and other likes. The company is debt free and has highest market cap of Rs.3935 Crores amongst its indian peers which translates to highest market share for its products & services. On a face value of 10 the company is giving Rs.7.5 as dividend (Record date 16th to 24th April 2014). The company is expected to showrobust performance with new products catering to Heavy Commercial Vehicle segment like Tractors, cranes trailers etc and also Railways. Current EPS is Rs.31.3 and expected growth of 20% in this year by Dec 2014. With a Price to Earnings ratio of 23x the expected price would be Rs.863 this is 15.5% above current price of 747.
______________________________________________________________________________
Technical view:
On weekly basis (medium term outlook) SKFINDIA has broken the downward sloping channel at 550 and since then it has shown strong uptrend current.
It started its 1st wave at 450 finished it at 690 and 2 wave began after that which seems to be completed at 625. The major 3rd wave is in progress. The 3rd wave has wave a, b & c constituted in it out of which 3.a has finished at 780, 3.b should be done around 720s and 3.c which will be too strong should commence from there.
Wave 1 (450 to 690) = 240points
Wave 2 (690 to 625) = 65 points (27% retracement of wave 1)
Wave 3 should ideally be 1.61 times Wave1(minimum) = (240*1.618) = 388+
So from 720-740 zone Wave 3 should see (730+388) = 1118 levels within span of 3-4months from now that is around June -July.
The SL for this setup should be 690. below which the wave counts would re assert and stock might test 625 levels again.

Overall, fundamentally the scrip is in strong hands with FII holding of 15% & DII holding of 17%+, fundamentally 863 is the target while technically the 1100+ is the target expected within 3-4 months. Current market statistics shows 45% of shares traded everyday are accumulated by investors which shows strong base build up at 740s zone.
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Patterns in Stock Prices: Jesse Livermore's Trading Methods

At the heart of Jesse Livermore's spectacular trading success was the skill he acquired as an eager 14 year old transferring stock prices from ticker tape to quote board - the skill of deducing the likely future movements of stock prices.

Livermore said, "To invest or speculate successfully, one must form an opinion as to what the next move of importance will be in a given stock. Speculation is nothing more than anticipating coming movements. In order to anticipate correctly, one must have a definite basis for that anticipation... "
Livermore believed that if you thought a stock would move in a certain way, you should enter a trade as early as possible after the market had confirmed your judgement.
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What Patterns Did Livermore Look For?

Jesse Livermore liked to trade stocks whose price was moving in an obvious trend. He was not interested in stocks whose price showed small price changes with no strong trend - such as the one shown

The patterns he sought to identify were patterns in the prices. Modern traders - and indeed many traders in Livermore's time too - plotted the prices and volumes against time on a chart. Jesse Livermore, however, did not use charts. He preferred to look at the numbers themselves. 

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The Pivotal Point

Jesse Livermore wrote:
"Whenever I have had the patience to wait for the market to arrive at what I call a Pivotal Point before I started to trade; I have always made money in my operations."
Consider the chart on the left. The price had been trending downwards before rallying from a low of 40c. The rally could not be maintained, however, and the stock has retreated to 40c again. 40c has become what Jesse Livermore called a pivotal point. Any significant move either upwards or downwards from the pivotal point would be traded by Livermore.



If the stock were to break below, say, 37c, Livermore would sell short. If it were to break above, say, 43c, Livermore would buy. He would observe the price action carefully after the buy because 49c - the high of the earlier rally - is another pivotal point. If the price failed to rally above 49c - again by 3c, say - Livermore would exit from the trade.
Livermore said:
"I never benefited much from a move if I did not get in at somewhere near the beginning of the move. And the reason is that I missed the backlog of profit which is very necessary to provide the courage and patience to sit thourgh a move until the end comes - and to stay through any minor reactions or rallies which were bound to occur from time to time before the movement had completed its course."
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The Normal Reaction

He would look for signs that the new trend was behaving normally and that it would be safe to stick with the trade.
Jesse Livermore would look for the following signs: 
 

• At the beginning of the move there should be an unusually large volume of shares traded.
• Prices should move generally in one direction (upwards or downwards) for a few days.
• A normal reaction should be observed - volume will decrease compared with the volumes observed during the initial trend, and the price may move against the trend somewhat.
• Within a day or two of the normal reaction, volume should increase again and the price trend should be resumed.

Provided this pattern is repeated, it is safe to stick with a trade. If there should be a deviation from the pattern, it is a warning sign. If the pattern fails and the price moves against the trend by more than a little, it is a sign to exit your trade and preserve your profit.

 

 

Midterm Trading call: Cox & Kings

Its a must buy around 110-120 levels!!

Try to get this in your portfolio around 125 -130 levels & above 148, 165 is for sure!!..
buy with stoploss of a good support at 126!!

ICICI direct's Model portfolio 2014

Large Cap Portfolio

  

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Mid cap portfolio

If we get Nifty trading at 5700-5800 range then one should definitely pick couple of Midcaps &/or Largecaps from this list.!

Weekend Show: Shake it off and take a step up!

One day a farmer's donkey fell down into a well. The animal cried piteously for hours as the farmer tried to figure out what to do. Finally, he decided the animal was old, and the well needed to be covered up anyway; it just wasn't worth it to retrieve the donkey.

He invited all his neighbors to come over and help him. They all grabbed a shovel and began to shovel dirt into the well. At first, the donkey realized what was happening and cried horribly. Then, to everyone's amazement he quieted down.

A few shovel loads later, the farmer finally looked down the well. He was astonished at what he saw. With each shovel of dirt that hit his back, the donkey was doing something amazing. He would shake it off and take a step up.

As the farmer's neighbors continued to shovel dirt on top of the animal, he would shake it off and take a step up. Pretty soon, everyone was amazed as the donkey stepped up over the edge of the well and happily trotted off!

MORAL :
Life is going to shovel dirt on you, all kinds of dirt. The trick to getting out of the well is to shake it off and take a step up. Each of our troubles is a steppingstone. We can get out of the deepest wells just by not stopping, never giving up! Shake it off and take a step up.

Why people come to stock markets?

Stock markets exists since centuries.. it's people and their want of money, the real life line of stock markets.

There has been lots of success stories around these markets which inspire people to join the game. Yes, failures in markets have been eroding the hard earned money but at the end of the day, its the hope, passion and sheer want of quick money that brings people back to markets!

At any given instance, there are two people involved in trade. A lay man may think that only one will win. But in markets, both can be a winner or loser. How is this possible? It is possible because the value of time is always factored in any trade. That is, if a trader had bought XYZ stock/stock options at 100 two days ago & if he is selling today to another trader at 102, he is making 2% profit, while the other trader may sell it at further 102.5 the same day making half a percent gain.. so who lost in this trade.. nobody.. If the situation had been opposite, both would be losers!

So one has to understand at what point of time he/she is entering the game and should also have an exit strategy with a time horizon.

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Suppose You Bought Wipro 100 share value Rs. 100 in 1980

1981 ,1:1 Bonus =200 shares

1985,1:1 Bonus =400 shares

1986 split to  Rs 10 =4000 shares

1987,1 :1 Bonus =8000

1989, 1:1 Bonus =16000

1992 ,1:1 Bonus =32000

1995 ,1:1 Bonus =64000

1997 ,2:1 Bonus =1,92,000

1999 Split to Rs 2 =9,60,000

2004 2:1 Bonus =28,80,000

2005 1:1 Bonus =57,60,000

2010 3:2 Bonus =96,00,000

Today’s Rate  Rs 431

You Earn Rs 413 Crore !!

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Wealth Creators and destroyers in Indian Stock Market

DO YOU KNOW ! ! !

Rs.10,000 Invested in INFOSYS in 1993 is worth Rs.1.25 Cr.

Rs.10,000 Invested Dr REDDY in 1990 is worth Rs.36 Lakhs.

Rs.10,000 Invested in CIPLA in 1990 is worth Rs.31 Lakhs.
Rs.10,000 Invested in HEROHONDA in 1985 is worth Rs.21 Lakhs.

Rs.10,000 Invested in RELIANCE in 1984 is worth Rs.6.5 Lakhs.

Rs.10,000 Invested in SUNPHARMA in 1994 is worth Rs.6 Lakhs.

YOU SHOULD ALSO KNOW THE OTHER SIDE...

PENTAMEDIA has crashed from Rs.2,344 on 23-02-2000 to Rs.7 
 SILVERLINE has crashed form Rs.1,395 on 22-02-2000 to Rs.32

HIMACHAL has crashed from Rs.2,552.90 on 08-03-2000 to Rs.20

DSQ Software has crashed from Rs.2,820 on 10-03-2000 to Rs.6

Note : As per closing rates of 17-04-2008, without considering dividends.

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THE LEADERS

The Living Legend: Warren Buffet 

Warren Edward Buffett (born August 30, 1930) is an American business magnate, investor, and philanthropist. He is widely considered the most successful investor of the 20th century. Buffett is the chairman, CEO and largest shareholder of Berkshire Hathaway and consistently ranked among the world's wealthiest people.
In 1999, Buffett was named the top money manager of the Twentieth Century in a survey by the Carson Group, ahead of Peter Lynch and John Templeton. In 2007, he was listed among Time's 100 Most Influential People in the world. In 2011, President Barack Obama awarded him the Presidential Medal of Freedom. Most recently, Buffett, along with Bill Gates, was named the most influential global thinker in Foreign Policy's 2010 report.
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 The Man Who Broke the Bank of England: George Soros 

George Soros, Hungarian; born August 12, 1930, as Schwartz György is a Hungarian-born American business magnate, investor, and philanthropist. He is the chairman of Soros Fund Management. He is known as "The Man Who Broke the Bank of England" because of his US$1 billion in investment profits during the 1992 Black Wednesday UK currency crisis.

In August 2010, Soros bought a 4% stake in the Bombay Stock Exchange (BSE) for about $35 million. In July 2011, Soros announced that he had returned funds from outside investors' money (valued at $1 billion) and instead invested funds from his $24.5 billion family fortune due to U.S. Securities and Exchange Commission disclosure rules.
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Here are some of the heroes of the Indian stock market, one can gain inspiration from them: 

Indian Warren Buffet: Mr. RJ 

Rakesh Jhunjhunwala (born 5 July 1960) is an Indian investor and trader. He is a qualified Chartered accountant. He manages his own portfolio as a partner in his asset management firm, Rare Enterprises. Jhunjhunwala was described by India Today magazine as the "pin-up boy of the current bull run" and by Economic Times as "Pied Piper of Indian bourses"

Rakesh Jhunjhunwala plunged into full-time investing soon after completing his education. He started his career in 1985 when the BSE Sensex was at 150. He made his first big profit of Rs 0.5 million in 1986 when he sold 5,000 shares of Tata Tea at a price of Rs 143 which he had purchased for Rs 43 a share just 3 months prior. Between 1986 and 1989 he earned Rs 20-25 lakhs. His first major successful bet was iron mining company Sesa Goa(now Sesa Sterlite). He bought 4 lakh shares of Sesa Goa in forward trading, worth Rs 1 crore and sold about 2-2.5 lakh shares at Rs 60-65 and another 1 lakh at Rs 150-175. The price rose to Rs 2200 and he sold some shares.
He credits Madhu Dandavate's Union budget of 1990 as the inflection point for his investing career which quintupled his net worth. Jhunjhunwala said, "Radha Kishan Damani is my guru”.
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The New Hero: Pulak Prasad

 

Pulak Chandan Prasad, the founder of Nalanda Capital Pte Ltd, is the man with the golden touch. He is 45 years of age and has rich experience in identifying winning companies. He did his MBA from IIM Ahmedabad in 1992 and joined McKinsey.

Thereafter, in 1998, he joined Warburg Pincus where he learnt the ropes of equity investing. He is credited with several investments (such as Kotak Mahindra Bank, Sintex Industries, Nicholas Piramal India, Satyam Computer Services) which gave Warburg Pincus multibagger returns. He is best known for the $300 million investment that Warburg made in Bharati Airtel which was sold for $1.9 billion.

In May 2007, Pulak Chandan Prasad decided to strike it on his own and started Nalanda Capital for making investments in India. Thanks to his McKinsey & Warburg Pincus pedigree, he had no problem attracting investors who pumped in $400 Million. He raised another $475m in April 2011. Fortunately, he has lived up to the promise and has had an incredible track record of finding multibagger stocks and enriched Nalanda’s investors.

NALANDA CAPITAL’S SECRET FORMULA FOR FINDING WINNING STOCKS

- Invest only in top quality stocks with high ROE, good business model and ethical management;

- Invest only after thorough research into all pros and cons. Never invest on an impulse;

- Diversify into different sectors to avoid risk;

- Prefer Mid-Cap and Small-Cap Stocks instead of Large-Cap stocks;

- Have a concentrated portfolio of a few stocks that you can watch carefully;

- Invest for the long-term. The minimum holding period is 5 years;

- Avoid Banks & Financial Stocks.