EquiTrade - A blog about equity investment and trading

Five Things To Remember While Trading In Equities

2011-09-22T11:37:00.000-07:00

I have been trading in equities since many years and have learnt a lot of things. Last two weeks have been great for me, while markets are bleeding; I have been able to make good profit. This is because I keep some important things in back of my mind while trading. Today I want to share some of the things with you. I am sure they will certainly benefit you in your trade.

1. Before you initiate any trade you need to know both Potential PROFIT and Possible LOSS. When you know both, you are all set with your exit strategy.

2. Always average when a stock goes UP, but never when it goes DOWN. If averaged in a short term trade while a stock is falling, it may become a long term HOLD when you don’t want to square off in Loss.

3. Never lose the money that you cannot recover. Your loss should always be less than your profit.

4. Always try to find opportunities in which you can get reward of Rs.10 for risking only one rupee. I never hesitate to lose one rupee when there are Rs.10 on table.

5. BELIEVE in your strategy. If your strategy signals that a stock will fall then don’t have a second thought on it, simply short and make profit.

Some More Stock Market Facts

2011-09-18T12:49:00.000-07:00

Most stocks open in green every morning.

Many times a stock’s previous day trading decides its today’s trading.

When you don’t square off, but average and hold shares, you lose money even when you are sleeping.

High Volatility = High Risk/Reward
High Volume = High Volatility = High Risk/Reward
News = High Volume = High Volatility = High Risk/Reward

Some Stock Market Facts

2011-08-28T09:48:00.000-07:00

It’s not stocks but the correct strategies which help you make handsome profits.

In a Bull market most investors make profit while in a bear market only lucky investors make profit.

To benefit from a fundamental stock one needs to identify its potential before it is revealed to everyone.

It is always wise to enter in a stock when it has low volatility because it is always followed by high volatility.

Bottoms are support levels and highs are resistance levels; however, it isn’t must for a stock to stop at either level.

RCom Short Term Trading Target Achieved (18% return in 4 Days)

2011-07-25T11:32:00.001-07:00

4 days back when the stock was closed at Rs.90.45, I had advised through a tweet to focus on RCom. I had mentioned 6% return on the stock for short term trading. Today the stock closed at Rs.107.5 on BSE; the trading tip has helped my twitter followers make more than 18% return in 4 days.

Bharti Airtel Long Term Target Achieved (31% return in 7 Months)

2011-07-25T11:07:00.000-07:00

7 months back on Dec 21, 2010 I had advised this equity at Rs.330 with the target of Rs.400 in a year. Its not more than a year and the stock is well above Rs.400; closed today at Rs.433 on BSE. This long term investment tip has helped the readers of my blog make 31% return in 7 months. This is not a very high return; however, if you will compare this with other BSE Sensex stocks, you will find that most of them are falling since Jan 2011.

How the stock will behave now?

The stock has a big resistance at Rs.435.35. It is because the stock had started falling from the same level two years back, it will most probably consolidate around this price and then move up again. Bharti Airtel’s Results on Aug 8, 2011 might define its next trend.

Has DLF bottomed out @ Rs.210.1?

2011-05-26T11:30:00.000-07:00

DLF announced its numbers on May 24 after market hours and as they were bad, the stock closed 4% lower at Rs.210.1 on May 25. The last time the equity closed below Rs.211 (Rs.209.6) was on April 07, 2009.

I have been tracking this stock since last three days and every time when it reached to Rs.210, it bounced back. This doesn’t ensure that the stock will not fall below Rs.210, but what I feel is, a long term bottom is almost to come. It is only time that will tell us whether DLF has already bottomed out or will bottom out soon, but I thought I should share my thoughts with you.

Shorting floodgates have opened today in Tata Steel shares

2011-05-16T10:45:00.000-07:00

In my recent post I had mentioned that Rs.582 is a crucial support for Tata Steel and once it closes below this level, it may see Rs.510. Today the stock has closed below this level at Rs.578.30, so this should be a potential shorting opportunity for next few weeks.

Why Rs.582 was a crucial support?

It is since Sep 8, 2010 that the stock had never seen a price below Rs.582. More importantly, other major stocks like L&T, Reliance, and SBI are also weakening.

Will it surely see Rs.520 in next few months?

The stock has excellent fundamentals from the long term perspective, so it may not break to the Rs.520 level; however, technically the stock seems going to Rs.520 in near term. It is a risky bet, but shorting is still worth as the charts suggest it will fall in the near future.

Successfully achieved Bharti Airtel and Tata Power targets

2011-05-16T10:39:00.002-07:00

In my previous post (May 04, 2011) I had mentioned that Bharti Airtel shares can be bought in the morning on May 5. The stock opened around Rs.354 in the morning and jumped to Rs.369. Also, it traded around Rs.367 for more than an hour. This short term trading tip helped visitors of this blog make 3% profit.

In the same post I had mentioned Rs.1220 target for Tata Power shares. The stock opened at Rs.1297 on May 05, made bottom of Rs.1223 and then closed at Rs.1228.75. The Tata Power trading tip helped visitors of this blog make 5% profit.

A high risk equity trading opportunity in Bharti Airtel on May 05, 2011

2011-05-04T12:10:00.000-07:00

Bharti Airtel will announce their quarterly results (including Africa numbers) on May 05, 2011. There will be high volatility in the stock on May 5 and will provide several trading opportunities.

The stock has been performing very well since February 01 except for last two days. It closed at Rs.385.15 on April 27 which was the highest closing since October 05, 2009. As the stock is near to its peak of last two years, the chances of it falling on the result day are very high; however, I am going to trade contrary to this and hence it will be a high risk trade.

I believe that from Bharti Airtel’s previous quarterly results the trend of the stock falling on the results day has changed and will continue for next few results. I will buy the shares in the morning if they are cheaper than the earlier day, anything around Rs.360 will be a nice price to make the maximum intraday profit. Yes, if it goes the other way around, should square off the position for minimum loss.

Other updates:

Tata Power: Technically Tata Power seems weak for next couple of weeks. The stock closed today at Rs.1296.35, but it can fall to Rs.1220.

Tata Steel: The stock is near to the support of Rs.582, if it closes below that then it can fall to Rs.510 in a couple of months.

Muthoot Finance - a new equity investment opportunity - last day tomorrow

2011-04-20T10:15:00.000-07:00

Price Range: Rs.160 to Rs.175, Issue End Date: April 21, 2011

With IPO Grade of 4 and book value of Rs.78, Muthoot Finance IPO can be considered for long term equity investment. Yes, the IPO is closing tomorrow, but if you believe in MFL’s unique business model, you shouldn’t miss the opportunity. More importantly, today the IPO has subscribed 25 times in QIB category, this shows how interested FIIs, DIIs, and MFs are in this IPO.

5% to 7% move in Satyam shares possible tomorrow

2011-03-16T10:24:00.000-07:00

Last few days chart suggests that Satyam shares might have more than 5% move on either sides. I am speculating this on purely technical basis. On January 20th, the equity had last high of Rs.67.20 and today it has closed at Rs.67.45 on NSE. This means, the stock should now try to get to the next resistance of Rs.72.15.

Possibly tomorrow the stock might see the price of Rs.71. To benefit from this equity trading opportunity, I will buy the stock if it opens in Red. It will ensure that even if it doesn’t move the way I anticipate, I will still be able to make profit.

Start accumulating Reliance Communications

2011-03-07T11:02:00.000-08:00

It started in 2008 and hasn’t ended yet; the RCom shares have been declining endlessly. Three years back on 7th March, the equity closed on BSE at Rs.543.35 while today’s closing is at Rs.90.05. This means it has fallen more than five times.

Yes, I still recommend this stock.

Why?

…because now is the right time to get into this stock. You certainly don’t need to hurry and make a lump sum investment. You should accumulate this stock at every low level (90-85-80-75); also it should be a pyramid investment (less at high and more at low). Forget about Rs.200 on this stock, even if you get Rs.120 in a year; you will get more than 30% return.

Remember...

It is a high risk investment, so don't look at it if it is not your cup of tea.

Buy L&T @ Rs.1661 for intraday target of Rs.1680; stop loss Rs.1652

2011-01-20T08:21:00.000-08:00

L&T has fallen from Rs.1980 to Rs.1660 in just 15 trading days, but it is still waiting for a dead cat bounce. The equity traded in green for the most part today. There is a good chance that it will have 1-2% rise tomorrow and the target of Rs.1680 seems feasible. Not only this, a smart investor should start accumulating this equity as it has already fallen 25% from its high.

Buy Jaiprakash Associates for the short term targets of Rs.113 and Rs.123

2010-12-30T09:20:00.000-08:00

Though the stock is below its 50 and 200 DMAs, the chart of last 10 trading days makes it a positive buy for short term. Jaiprakash Associates closed today at Rs.102.85 on BSE. It has potential to achieve the targets of Rs.113 (9.85%) and Rs.123 (19.56%) in the short term. Remember as the long term chart is weak, when the stock achieves these targets, a trader needs to square off.

Updates on equities

2010-12-21T09:40:00.000-08:00

Bharti Airtel:

I always recommend this stock; one can keep accumulating this stock for long term perspective. The equity seems reasonable in the range of Rs.300 - Rs.330 and target of Rs.400 can be expected within a year.

IVRCL Infrastructures & Projects Limited:

Last time when I provided an update the stock price was Rs.153.15. I had mentioned that the stock will have a sharp fall if it will break the Rs.145 level. The equity had indeed broken the level and now trading at Rs.126.8. As the stock is in bearish trend, buying for long term is not recommended. Yes, you may see some action on this stock around budget as there can be many announcements related to Infrastructure sector.

Reliance Industries Limited:

I had mentioned targets of Rs.1200 and Rs.1400 on this stock a couple of months back and I still maintain these targets. Also, this equity is always a good buying opportunity in the range of Rs.950-Rs.980 for the targets of Rs.1075-Rs.1100.

Satyam Computer Services Limited:

A couple of months back, I had mentioned on this blog that one should start accumulating Satyam around Rs.70. The stock still needs some more time to consolidate; this is right time to accumulate Satyam shares. There is some downside as well, but risk reward ratio around Rs.70 is favorable for one who is willing to wait for a couple of years.

SKS Microfinance Limited:

A couple of months back when this stock was trading at Rs.1005, I had advised to stay away from this stock for at least couple of months. The stock is now trading at Rs.612, for a long term perspective, one should wait for few more days and enter only when there is clarity about company’s future prospects.

A nice quote

2010-10-25T09:39:00.000-07:00

“There is always right time to invest in stock market; finding and investing in an undervalued equity matters."

– Sumit Khandekar

Updates on my equity investment tips

2010-10-25T09:30:00.000-07:00

RCom:

Almost a month back, I had mentioned short term trading targets of Rs.177 and Rs.190. The stock closed at Rs.177.95 on 05-Oct and achieved the first target. It almost achieved the second target of Rs.190 by closing at Rs.187.10 on 13-Oct. Yes, the stock has fallen from that level, but the next target I see on this equity is Rs.200.

IVRCL Infrastructures & Projects Limited:

I had mentioned several targets on this stock for 3-6 months period; however, the stock has not been able to move up yet. It closed today at Rs.153.15; it seems that there is still some selling pressure on this stock. The support level for this stock is Rs.145, but if it breaks this level then it will have a sharp fall. I am still optimistic about this stock as it has been consolidating since many months and should move upwards.

Reliance Industries Limited:

I had mentioned Rs.1200 and Rs.1400 targets on Reliance a few days back. The stock closed today at Rs.1090.35 and will see my targets soon.

Satyam Computer Services Limited:

On 04-Oct, I had mentioned that this equity is in downtrend and may see Rs.72 within 1-3 months. The stock has fallen from that day’s closing of Rs.89.20 to today’s close of 81.40. I see Satyam to bottom out soon, so a smart investor should soon start accumulating these shares.

SKS Microfinance Limited:

On 28-Jul when this company’s IPO was on, I had mentioned that this equity will be a good investment opportunity. However, there are several bad news on this stock due to which the stock has been declining. Today the stock has made its new low, therefore I strongly recommend stay away from this stock for at least 1-2 months.

Short term equity investment target achieved successfully

2010-10-05T07:48:00.000-07:00

On 17-September, I had mentioned targets of Rs.177 and Rs.190 for RCom. I had also mentioned that RCom will take two weeks to reach the first target. Today RCom closed at Rs.177.95 on NSE, so it took 4 more days to achieve the first target.

Outperfomer and underperformer equities for short term to long term perspective

2010-10-04T10:40:00.000-07:00

IVRCL Infrastructures & Projects Limited - The stock closed today on NSE at Rs.165.10 should soon achieve the targets of Rs.180, Rs.187, Rs.195, and Rs.204. I anticipate these targets within 3-6 months.

Reliance Industries Limited - This equity has been in a range for last 1 year and has not been able to cross Rs.1200. RIL closed today on NSE at Rs.1017.85 and I am very bullish on this stock. I expect targets of Rs.1200 and Rs.1400 within 3-4 months.

Satyam Computer Services Limited - I am a bit bearish on this stock for short term perspective, but very bullish for long term. The equity closed today on NSE at Rs.89.20 and I believe it should see the price of Rs.72 within 1-3 months. Yes, Rs.72 will be a good price and will provide an excellent equity investment opportunity.

Short term trading Tip: Buy RCom at Rs.167 for the targets of Rs.177 (6%) and Rs.190 (13%)

2010-09-17T09:36:00.000-07:00

For a high risk trader this is a good short term equity trading opportunity. RCom was in down trend for two months, but it has changed its trend today and its chart suggests that it will easily achieve targets of Rs.177 and Rs.188.

RCom should achieve Rs.177 target in next couple of weeks and Rs.190 target in a month. Remember this is a purely technical tip because fundamentally these RCom shares can’t achieve these targets.

Monthly equity investment tip - August 2010

2010-08-29T22:36:00.000-07:00

Track multiple stocks, but stay invested in only one stock

An investor with a small amount to invest (Rs. 50,000 - Rs. 2,00,000) can make more money by investing in one stock rather than investing in a portfolio. Before I show you how this works, I would like to let you know why one stock strategy is vital for a small investor.

For example, there are two investors; one is Mr. ABC with net worth of Rs. 1,00,000 and the other is Mr. XYZ with net worth of Rs. 30,00,000. If both these investors fetch return on their investment at the same percentage rate then the disparity between their net worth will keep increasing. If Mr. XYZ fetches ROI at 20% pa then Mr. ABC needs to fetch ROI at 42.5% pa to beat Mr. XYZ in net worth after 20 years.

As you now know why it is vital, let me show you how one stock strategy makes more money than a portfolio.

For example, Mr. ABC had invested Rs. 1,00,431 in 5 stocks as following on Aug 27, 2009 then his portfolio value as on Aug 27, 2010 would be Rs. 1,40,060. This is almost 40% return, but remember I have included 4 very good performing stocks in this portfolio.

Tata Motors – Rs. 19,930.10 (41 shares @ 486.10)
Infosys – Rs. 19,726.20 (9 shares @ 2191.80)
Reliance – Rs. 20,423.50 (20 shares @ 1021.18)
BPCL – Rs. 19,756.00 (40 shares @ 493.90)
Hero Honda – Rs. 19,756.00 (14 shares @ 1471.15)

Instead of investing in 5 stocks, if Mr. ABC had invested Rs. 1,00,261 in BPCL (203 shares @ 493.90) then his net worth as on Aug 27, 2010 would have been Rs. 1,57,609. This is 57% return which is quite higher than 40%.

What’s the risk involved in the one stock strategy?

If the stock you have invested in tumbles then it can easily lose you a lot of money. In this situation, a portfolio can mitigate your risk.

What’s important to be successful with this strategy?

You need to keep tracking multiple stocks for a long period of time. This will ensure that you have enough knowledge about your few favorite stocks. More importantly, at some point of time, you will easily be able to identify a good stock.

It is also important that you set your target price and once the target is achieved you need to book profit. This will be the time when you will again need to identify a stock. As you will be keep tracking multiple stocks, you will easily be able to switch your investment.

Equity trading tip for August 20, 2010

2010-08-19T09:54:00.000-07:00

Today BSE Sensex has closed with +197.82 points while Downjones and Nasdaq are down by 184.63 and 41.88 points respectively at 9:40 PM IST. This is because of increase in US jobless claims. This a bit risky situation; however, if Downjones closes with only -120 points tonight then our markets can go up tomorrow as well.

What can be a good opportunity in this situation?

Reliance Industries is underperforming since last few days and if our markets continue to go upward tomorrow then Reliance will outperform. Reliance has closed in green today, this means, it has already changed its trend and will move upward soon.

How to trade to benefit from this opportunity?

Wait for first few hours, if Reliance trades in green for first three hours and if you are able to get it at Rs.985 around 12:00 PM, you may expect Rs.1025 by 3:20 pm.

What’s the risk?

Most of the times, Reliance moves faster on Fridays and Mondays, so it is possible that it moves on Monday instead of tomorrow.

Intraday trading tips for August 03, 2010.

2010-08-02T07:57:00.000-07:00

Keep pre-market buy limit at Rs.315 for Bharti Airtel with the target of Rs. 320, you should get this price by 2.30 pm.

Also, you can short Hero Honda if it opens +1%. The stock is currently in downtrend, so you can benefit from the opportunity; a strict stop loss is necessary whenever you short.

Keep a close watch on a new equity investment opportunity

2010-07-28T10:39:00.000-07:00

IPO of SKS Microfinance Limited has opened today and will close on Aug 02, 2010. The price range is Rs.850 to Rs.985. Yes, the IPO price is costly, but this Hyderabad based company can be a good investment from a long term perspective.

Their last three years performance has been extraordinary, they have been able to increase their EPS (Earning per Share) substantially. The first year their EPS was Rs.5 which tripled to Rs.16 in the second year and now it is Rs.27. Moreover, their business model is very strong and ensures their YOY growth.

As far as I am concerned, I am not happy with the IPO price, but I will surely invest in this equity after a few months. There is a good chance that this stock doubles in a year or two. What my advice to you is, keep a close watch on it and whenever you get this stock at a right price, don’t miss the opportunity.

Monthly equity investment tip - July 2010

2010-07-22T11:42:00.000-07:00

If you want to be a smart investor then surely avoid investing in PSU stocks.

Now you will ask: Why?

A very good reason is, PSU stocks most of the times perform because of a regulatory change. If the change is in their favor, they jump rapidly. Contrary to this, if the change is negative, they fall rapidly.

Now you will ask one more question: Why shouldn't I invest in a PSU stock which is in uptrend after a positive regulatory change?

Remember PSU stocks are very slow movers, so if you get trapped at a higher price then you will need to wait for a long time to recover your investment.

Now you will ask for an example of a slow mover PSU stock: A very good example is NTPC. In August 2009, NTPC was available around Rs. 220, the same stock is now available around Rs. 204.