Short Term Study EDELWEISS

Study on Edelweiss suggests a breakout on charts at 264

The technical chart of Edelweiss suggests a strong uptrend breakout from 264;
above 275 on closing basis, uptrend will get stronger. Strong Support at 257;
Near term resistance 290; 310 and above.

Disclaimer: This  is a study and not a Buy or Sell recommendation.

Old School Real Estate will it be a Multi-bagger!

This informative post on Unitech could well become traders favorite in some time!

(CMP as of 4th April 2018 : 6.75 a piece) 

The stock is of Book value INR 35; market cap only INR1,706 crores; reserves of INR8,900+ crores; Total debt of INR 2,900 crores.
Technically, it is about to give big breakout with INR 4 being a strong support; poised for huge upside.
The time frame needs to be 3-4yrs to see how well the patience pays. Expected resistance in upward journey is at three figures from 100 to 300++.
The "logical" valid reason will unfold in future time. Risk reward is favourable now.

Disclaimer: This above article is for study purpose only and does not indicate Buy or a Sell recommendation to anybody.

Rise up Again

A Study on new opportunity : Rel Capital

This study purpose chart of Rel Capital indicates strong support on daily chart at 410. Current rate is 438.

While resistance on upward movement is at 450 - 468 - 484- 550- all the way up till 810 where there is a gap in chart. The stock is also in process of a small round bottom which will give good breakout on closing above 640.

Disclaimer: The above article is for study purpose only. It is not a buy or a sell recommendation.

SHILPAMED at an infliction point

Buy between 600-620 zone. Once above the breakout of 650.. it will be tough to catch.

Short Term Trading Call: Relaxo

Buy Relaxo and be relaxed

Stock is about to begin new uptrend and scale up towards 505-520-580
Above 580..640 about to be reached.

time frame - 1-2 months. Go for it!

Short Term Buy Call: GOKEX

GOKEX : Gokaldas exports.. buy with SL of just 108 on cmp of 111-112 for first breakout above 135 which would lead to 175-200!

Long Term Investment Call#2

Buy MAGMA fincorp @ 100-104 levels.

SL would be around 94 for step by step targets of 105-107-111-118-123-127-134-142-148-153-158

catch this boiling Magma today!

Long Term Investment Call#1

IBVENTURES: Indiabulls Ventures Limited

Buy this stock with of view of 2-3 years minimum around 15-19 per share range.
The target is expected to be 26-32-35-52-74-95-100+

Right approach to trade

 If you want to be a successful trader, get equities down first. They will sharpen your skills and reactions.

A trader needs to preserve his capital. No capital means no trading its that simple. Here 'capital' means owned money and not those borrowed from friends or personal loans!

The advantage of owned capital is that

1. It gives you peace of mind in executing trades.
2. You are not bind to generate substantial profits
3. No time pressure to earn to service EMI of loans
4. Your other work life balance does not get disturbed

Trades executed should have following flow chart:

Once you have a successful trade in place, nurture in patience and aim for target

It was put best by the famous Jesse Livermore who said “It was never my trading that made me money in the market, but rather was always my sitting tight.”

While any recipient of the so-called 'hot tip' can trade, making money consistently is possible only when you have sufficient knowledge of the markets and skills for technical analysis, which is the science of forecasting prices based on historical data. 

For every good trader, there is a time when he forgets whether he is trading to make money or to prove that he is right. When he focuses on the latter, that's when disaster strikes

The only way to get good at something is to do it a lot, practice practice practice, why would trading be any different?

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.