You need to know the basics of technical analysis that work in the market aka Support and Resistance and couple of mathematical patterns and then practice to implement them when you have the terminal open in front. The mistake that many investors make is they try to learn too many patterns that makes it impossible for them to apply when it comes to trading in live market.

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I opted for yearly option for combo offer of PWT (PowerYourTrade) just to make sure I am not judging their service on a very small time frame.

My Account Status

On 26th Jan 2012, my account status is as follows.

I am a member of PWT for last 90 days now and it is quite a long time for me share my review about their service. So let me share some of the key facts about the service.

The Sales Page

When you are not a paid member in PWT you are mainly driven into being a member by the following recommendations.

You see multibaggers that have gained few hundred percentages over a period of few years. Not only that if you see previous multibaggers here, you see everything green. On Jan 26th 2012 I see it as follows.

Click On Image to View Complete Screenshot

Reality of Multibaggers

Reality of Multibaggers as on 26th January 2012 when logged in is…

Click on Image to View Complete Screenshot

The obvious question that you may have – Is the first screenshot wrong? No it is not wrong. You may have not noticed one thing that makes first image correct, which is the date of recommendations by experts. If you note the recommendation date you will see that those gains are for stocks recommend in June 2011 and beyond and nothing after that. It means very few Multibaggers have done anything substantial in the current market scenario.

Many can argue that that having dates means they have the accurate information but that is also not the case all the time.

The Hidden Truth

On April 19th 2011 SP Tulsian initiated a buy call on FAG Bearings, which is up by 30% now. The reality is on April 29th 2011 SP Tulsian initiated a sell call on the same stock and so even if you purchased the stock on his call you would have sold it anyway and it means the recommendation is not at all a reality where you make 30% but as guest you only see that a recommendation is up by 30%. See the screenshot below for sell call for the same stock after 10 days on 29th April 2011.

This actually reveals the secret to gains of 2000% as well. They recommended the stock at some point and that stock is now up by 2000% but that does not mean they have not initiated any sell call in between and you can actually make 2000% in reality. There may be buy and sell call but they only show the calls they have taken some time back that has gained few hundred percentage.

2009 Multibaggers

You can view 10 pages of Multibaggers stocks recommended over time and as of today I see the following calls in Multibagger calls from 2009.

Click on Image to View Complete Screenshot

Very few have performed from 2009 till date.

Final Thoughts about PowerYourTrade

You can subscribe to PowerYourTrade tips if you understand that every multibagger stock suggestion is not a multibagger and they are just any other stock suggestion. Apart from that Hem Securities Multibagger calls are more reliable and works far better than any other calls. This is my personal experience based on some tracking that I did for last 3 months.

Update: I don’t share any stock tips and so please do not email me for any stock ideas. I am a personal blogger who let you understand how to trade and invest in market but don’t prefer sharing what stocks you should be trading in market.

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What is Top line?

Amount received from the sale of products or services before the expenses. Is also referred to as Gross sales.

What is Bottom line?

Bottom line is the total income after adding total revenue and gains and subtracting all expenses and losses. It is also referred to as Net Income

Example

From the above definition we know what is top line and what is bottom line. Now let us take a simple example to understand it further.

We all use mobile phones and so let us take an example of dummy mobile phone manufacturing company. We call the company is XYZ company. XYZ Company has come up with a brilliant handset and so the sales of the company in the current month have increased by 20% from the previous month.

It means XYZ company is generating 20% more cash compared to previous month and so XYZ company sees a top line growth of 20%+ (+ is because XYZ had some nominal growth without this new handset anyway)

Does the above scenario also means XYZ company is also making 20% in net profit. No because to manufacture such high number of mobile phones, the company had to setup new manufacturing units. So XYZ company has taken a loan that has increased expense of the interest part that they are paying to the bank. Taking the interest expense the company’s bottom line did not grow at 20% but say it grew only by 8%.

This means you have good sales and good top line growth but then bottom line is lagging behind. As the sales are good with good cash inflows, company decides to pay off major part of the loan and soon the bottom line of the company starts catching up.

Real Example

We assumed an XYZ company but it is always better to see a real example to understand the real market terminologies. Let us take an example Infosys and understand the difference between top line and bottom line.

Let us look at the yearly result for the last 5 years for Infosys at MoneyControl.

Our focus will be for the time period Mar 09 and Mar 10. There is an increase in total income from 20,766 to 22,050 and so we see a gross profit rise from 7408 to 8270 but if you see the net profit, it remained flat at 5819 to 5803. This is mainly because of the extra 900 Cr tax from 895 to 1717 Cr Rs. We see growth in topline for Infosys but there is hardly any growth in bottom line of Infosys in the same time period.

I hope this clear the confusion among fellow investors about the terms top-line and bottom-line and what do they mean.

How scenarios can impact top-line and bottom-line?

A company would be experiencing top-line growth if a new product or campaign increases sales for the company.

Bottom-line growth would occur in a situation where a company found a method to reduce the cost. It could be by having new supplier for raw materials or government has some policy change that can reduce the cost or a management decision to generate cash to pay off the loans.

The significance of each of them

Bottom line significance is the efficiency in operation of a company that can include spending and operating costs. Top line, on the other hand, only indicates how effective a company is at generating sales and driving customers.

Drastic change in bottom line effects the price of the share almost instantly but the growth in sales may not impact the share price in the same direction every time.

Final Thoughts

A company can always have growth in both top-line and bottom-line growth at the same time if it can increase sales (top line) and reduces its operating costs (bottom line). Share your views and feedback in comments below.

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Let us first identify a trend in a stock.

In VIP Industries, you can spot a downtrend easily.

Stock went from 175 to 110 in pretty much a straight line. At 110 some buying or short covering was seen and then again it was back to 110 in couple of days time clearly suggesting down trend. The important thing was it did not break 110 and I anticipated that 110 could prove to be a pivot of trend reversal. This is when I took a trade against the trend.

Here are my trades.

Nov 22 2011 is when I took a small position of 100 shares in VIP Industries at a price of 118ish. 24th Nov is when I was convinced that bounce is evident and so I added to my initial position.

Stop loss was 110 with a target of 130 odd. The ROI for the trade was I would either make 12 Rs per share or loose 8 Rs per share i.e. a ratio of 1.5 is to 1 for target versus stop loss.

I saw a peak in VIP Industries at 128 and not at 130, which was my target and so I sold of on 29th Nov 2011 at around 125 odd levels.

On Nov 30 I took up yet another position at around 123 levels. I actually rushed into this trade but as I was trading against the trend I had a strict stop loss of 120 that was previous days low. As the stock broke 120 I was out of it with a small loss.

3 Golden rules when trading against trend

1. Don’t rush - When you are trading against trend, wait for the support (resistance if shorting) to be created and tested more than once before you even think about trading against the trend.
2. Follow strict stop loss – Genius of a trader can be wrong and there is no harm in accepting you were wrong but trying to prove you were right and holding on to a position can prove more fatal. I could loose 33 % of my investment from 120 to 80 if I would not have followed the stop loss.
3. No trade is good trade - Don’t trade if you are not sure because it is better not to trade against the trend. Wait for the trend reversal. You may miss the sharp bounces from support but that means you are trading with more conviction.

I hope this helps fellow traders trade with more conviction in market.

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Pankaj, my friend just realized that he had been facing some financial instability. Not that he was not able to manage his funds well but was just too unsure whether he had a good portfolio of investments or not. Just like Pankaj, today the common man not just looks for growth of his investment but also safety of his fund. In such a scenario investing in mutual funds is still regarded as unsafe bet. If you feel yourself stuck in a situation like this then definitely the article below will help you with some understanding.

It has been seen in the recent past that Mutual funds have been in the top most rung as regards to investment tools. Thanks to the much needed hype by the mutual fund agencies by its immense advertising and publicity gone for it. Very few people realize that inside of all the rosy look there lies a dark picture of mutual funds which is hidden. There are few mutual fund myths which if not carefully taken into consideration can lead to serious trouble

In this article, we debunk 5 popular mutual fund myths.

1. Funds with more stars/higher rankings make better buys

Often people fall prey of the rating of the mutual fund and blindly invest in the same. People must understand that these ranking are done on the basis of past performance which does not take into consideration the future market conditions. Moreover these ranking keep on changing with time according to the performance of various funds. Ranking does not specify the kind of investor it will benefit. Different investors look for different kind of gains.

TIP- One must not blindly look at the ranking and rating but should conduct his own research as the financial goal for each investor may be different and ranking may not have been done taking in mind the individual financial goal.

2. Once the fund makes a grade, so do all its funds of same fund house

It is not always true that a good fund house may have all good funds. Many investors often make this mistake of judging a fund because of its fund house reputation. It’s quite a possibility that one fund in a particular fund house may perform exceptionally well and on the other hand another fund may not perform well. It is true that negligence of the fund house towards a particular fund may lead to its performance but it is not correct to say that all funds in a particular fund house will be equally good.

TIP-It is good to review the fund house but along with this it is equally important to access the performance of the fund separately.

3. Equity funds also invest a high %age in debt

Many mutual fund state that their strategy is to invest up to a certain percentage of the funds in debt so as make use of the assets and generate growth by use of both equity funds as well as debt funds. Unfortunately the reality is that the equity fund basically invests most of their assets in equity market and very little in debt funds. In such a scenario investors whose main aim is to invest was to get maximum revenue due to asset allocation are misguided.

TIP-If you are looking to generate revenue by making use of asset allocation the its advisable to invest in balanced funds or hybrid funds.

4. A fund invests in the same stocks as its benchmark index

Many investors are under a preconceived notion that mutual fund operates under a specific index. This may be true but only in the case of an index fund. In all other case it is under the will of the fund manager. Hence in other cases it becomes difficult for the investor to benchmark the performance. In case of an index fund it is easy for the investor to find out the size of the fund and its performance.

TIP-It is wrong to assume that the fund will always invest in one kind of fund from time to time. This is just possible in case of the index fund and all other funds have the desecration of the fund manager.

5. Dividend option is better than Growth Option

Due to lack of understanding and wrong information many investors believe that investing in dividend option of a mutual fund is better as it yields more returns in the form of dividends. It is mostly concluded the dividend option is better than the growth option as it keeps you happy when money comes home after every few months in the form of dividends. But you must take this into consideration that your mutual fund NAV is reduced by the similar amount once you get dividend. And you won’t be able to take the best possible advantage of power of compounding which is considered as the eighth wonder of the world.

TIP: Dividend option may not always prove to be beneficial .In fact the investor must value his goals and liquidity while deciding on growth or dividend option.

This article is written by Mr. Mayank Gupta who runs a personal finance blog Ninemilliondollars.com where you can find articles on tax saving options and provides financial planning services

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1. How I Made 50,000 Rs In Just One Trade - I shared my secret with an example on How I Made 50,000 In Just One Trade.
2. Best Gold ETF in India - Comparing major Gold ETF’s in India to see which one is best gold ETF of India and also see why Gold ETF’s has a price difference.
3. Physical Gold Or Gold ETF – Which is Right for You? - Gold ETF or physical Gold. The positive and negative aspect of investing in each of them so you can decide which one is right for you.
4. Ask me Anything - Where my blog reader can even ask what am I doing right now at this moment, Was fun answering those questions in 2011.
5. Invest in Mutual Funds – Can Ads Substitute Entry Load? - AMFI India has came up with ads – it is wiser decision to invest whatever little you can every month in Mutual funds and why I think these Ads cannot substitute Entry load?
6. How to Calculate Support & Resistance Levels – Chart of MIC Electronics - How to Calculate Support and Resistance Levels as well as stop losses for the stock based on chart patterns taking example of MIC Electronics India limited.
7. When to Buy In Market Crashes - Answer to yet another user question that I was and is getting quite often which is when is the right time to buy in market crashes.
8. List of Stocks You Should Buy Now and Forget Forever - Very different yet effective List of Stocks that you can buy now and forget.
9. Why 4700 is Nifty Support and What to Expect From Market Ahead? -Yet another explanation of Nifty Support levels using chart patterns.
10. See How Chart Pattern Repeats by Itself - Hindalco came up with very good set of results. On major news channels, brokerage houses gave price target of 208 but see the charts of Hindalco.

Don’t hesitate to share your personal best article in comments below.

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Short selling is when you sell a stock but you don’t own that stock. The reason you can sell those stocks without having them is because you don’t need to deliver them immediately. You can deliver them to the buyer after some time period, usually end of the current month or few months down the line depending on your contract.

Pretty much a definition; now let us take a very simple example from our shopping experience to understand the concept of short selling.

Short Selling Example

Let us say you are planning to buy some furniture from a showroom. When you step in, you realize that they only have few options for you to choose from the display area but they have lot more options to choose from the catalogue. The shop owner or sales people tell you that as they have limited space the option they show in the book is ready to be delivered in godown. You selected one of such furniture, which is available, but not in the display. You pay for it and they tell you that furniture of your choice will be delivered to you within one week.

Sounds pretty normal.

Now let us look at the same transaction from the perspective of the showroom. They actually do not have the exact furniture set of your choice ready in the show room and most possibly not in godown as well but they have actually sold the same to you. They have taken some time before they will actually deliver those items to you and within this timeframe they know they can manage to get it constructed and deliver.

So they actually sold good they don’t have it but they know they will be able to get the goods created in market and deliver in the stipulated timeframe.

How Short Selling Works in Market?

The same concept of shorting or short selling works in market especially futures market. You actually do not need to deliver the stock you shorted the same day but you can deliver that on the settlement day for your cycle period and this period is normally last Thursday of particular month.

Let us say you expect some securities may go down from the current levels and so you decided to short that particular stock. If the stock prices move as per your expectation, you buy the stock few percentages down your shorting price and make the delivery of your stock on or before the given timeframe to the buyer. This is short covering.

It can happen that stock price did not move as you expected. So you may have to buy the stock higher than your shorted levels and it is termed as short squeeze where you are forced to cover your short to minimize your loss.

Points to Remember about Short Selling in India

1. In India shorting is only possible in Nifty stocks in futures market. You cannot short stocks and hold your shorts over night that is not traded in futures market. This is not the case in other World market especially NASDAQ. You can short any stock you wish and buy back at later date.
2. Mutual Fund houses in India are not allowed to short the stock and they can only trade buying and investing majority of their money. They cannot even remain liquid below certain percentage of the total assets and so when market is going down and even if the fund manager’s knows, he cannot do anything.

Hope this helps fellow Indian retail investors understand short selling. Share your views in comments below.

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Mutual funds are a popular way of investing in the stock market. For people who do not understand the basics of the stock market, it seems mutual funds are a good way of getting a piece of the stock market pie. They feel that it is best to leave their money in the hands of a professional, namely, the fund manager to handle it, which should then obviously yield good returns. However, it is not as simple as that. Before you decide which mutual fund to invest in, it is important to understand the basics of a good mutual fund portfolio.

There is no doubt that investors are looking to strike the right balance between safety and aggression. They want to maximise their returns without taking on too much risk. Before you invest in a mutual fund it is important to answer the following questions:

1. What are your investment needs? Depending on what stage of life you are at right now, your investment needs might be different. Also factors like current income, expenses, commitments, debt liabilities will also affect your need for flow of money. Either you would be saving money to buy a house or to give your children a world class education or just looking at a comfortable retired life. You will also need to analyse how much risk you are willing to take and whether you are looking at returns in the short term or long term. Depending on this you can choose the mutual fund that is right for you.
2. Choose the right mutual fund. After you have identified your needs, you can look at the offer document of the company and see if it matches your needs. Also you should look at other funds managed by the same manager and see how successful have they been. Also look at factors like consistent performance, risk adjusted returns, total returns and protection of capital. Each of these factors is very important and has its significance for different categories of funds
3. Balance the mutual funds in your portfolio. Different mutual funds have different objectives and serve different purposes, so it is important to carefully select the right mix of funds to suit your needs. Your portfolio should be a balance of debt and equity mutual funds. A minimum exposure of 65 % to equity is a good combination. Further, you can enjoy the tax benefit of an equity scheme by investing in a balanced fund. You don’t want overlap, and also probably do want things that don’t correlate. For example, gold funds are considered an inflation hedge. While they typically move in sync with oil- and energy-sector funds, they tend to move in the opposite direction of the U.S. dollar.
4. Portfolio diversification. The mutual funds should provide a diversification across different asset classes, sectors and even geographical boundaries. A diversified portfolio has lower risk associated with it, rather than a sector specific one. Also historically, the biggest gainers are from the multi-cap and mid & small-cap categories. The simple reason for this is the higher allocation to mid and small-cap stocks, which see a sharper rise (or fall) in rising (or falling) markets. Just to cite an example of best performing mutual funds in small and mid cap section in 2011:
   

   	Returns (%)
   Name of mutual fund	6 months	1 year	3 years
   Birla Sun Life MNC Fund (G)	-5.6	-5.6	37.1
   HDFC Mid Cap Opportunities (G)	-7.3	-9.9	36.7
   IDFC Premier Equity – A (G)	-4.6	-10.1	37.8

5. Take advantage of market fluctuations. To do so would require investing in the market regularly. When the price is high, then investing the same amount of money would get you lesser units. So when you buy again when the market falls you average your price of units, thus increasing your return.

Therefore depending on an individual’s risk taking ability and investment term, his mutual fund portfolio should look like this:

Ultimately, an investor can build a winning portfolio with no more than six funds covering large and small stocks, bonds and money-markets. Sector funds and other issues can be used to invest in areas the investor prefers, without creating massive overlap with the core holdings.

A portfolio that’s a little more complicated is fine, but going much further — with closer to 20 funds than a half-dozen would make the portfolio extremely difficult to handle. The funds should be able to work together to maximize returns and not fight with each other.

This article is written by Mr. Mayank Gupta who blogs at www.ninemilliondollars.com where you can find articles on tax saving options and on mutual fund investments

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Why I sound sceptical on Indian market for last few months. What about the Indian growth story?

I am sure this may be the question of many blog readers.

I was believer of Indian growth story but not recently for few reasons.

In May June India had one big concern. It was inflation. Every country had its other problem but Inflation was global problem because of rising commodity prices and so was in India.

India Government and RBI tried controlling the inflation by tightening the interest rate and liquidity and sacrificing growth. These steps lead to multiple problems now.

1. Growth slowed down

We had forecast of 8% GDP growth and now it has come down to under 7% and so this means market will have negative sentiments. RBI statements like they are ready to sacrifice growth for inflation were not comforting because inflation at that time was not driven by liquidity but was driven by commodity prices.

2. USD not comforting

Steps that are taken to control inflation at the cost of growth mean Indian market would see an outflow of money which has taken USD rates roughly from 44ish to 52ish levels in no time. Roughly 20% increase in USD rates.

Let us take some numbers to see how this is actually making situation worst for India. From may till now oil has fallen by 20% from 110ish to 90ish but the appreciation of dollar by 20% means that the benefit of oil cooling in the world market has no benefit for India. Similar things also apply to other commodities and this means India has no benefit whatsoever to the world’s cooling commodities scenario now.

3. High Interest Rate

Currently inflation is where it was and we have added issues of less growth, less foreign inflows and high interest rates. So according to me our government failed to take right steps in May June time frame that has actually compounded lot of problems.

We have high inflation and still may need to lower interest rates to get the growth back on track. Work on methods for more inflows of foreign money. So I am not very bullish on market as investor but more favourable for trading.

Final Thoughts

If Indian government can show us steps they are taking on current issues especially USD inflows that will give some sort of hope.

What are your thoughts about the current Indian scenario? Share your views in comments below.

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I have shares of XYZ Company at some price and it has fallen 20-30%. Can I buy more of XYZ at these levels or wait for some more correction before buying.

Similar questions are being fired to every blogger and Manshu of onemint wrote don’t average down and compound your problems.

Let me show you what Manshu is trying to explain in his article with an example. Read my post Multibagger Stock Idea – Gateway Distriparks Ltd.

I was not very bullish on the market when I published that post and so I had very small investment in the stock just to make sure, if there is correction in the market and if the stock does not breach the support of 140 I may add more to my position at the same pricing 144. The idea behind the small position was not to average at lower levels.

Once stock traded decisively below 140 on 14th November 2011 I was out of it. As of today the stock is trading around 125 and I have easily saved myself 15 Rs per share. If I want, I can get into the same stock at a lot lesser price or may be at the same price of 140 depending on what charts tell me.

You can argue that what I am saying is about the small cap and mid cap stocks but what about investment in the blue chip large cap stock which has fallen 20-30% and so should I average them or not.

The answer is still NO because I am not a fan of averaging even the blue chip companies at lower levels. I average them at higher levels. As of now what I prefer when the market is falling is – See if the blue chip companies can cross major resistance levels and if they don’t which is more likely I try to come out of those stocks and then buy them back again at the support levels or lower levels. See how I trade my Long Term Investment Portfolio and profit from it.

Don’t average and earn more but you can earn by selling your positions and then buying back at lesser price and pocketing some cash. Share your views and feedback in comments below.

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1. Multibagger Stock Idea – Gateway Distriparks Ltd

Nov 9 2011, in my article on Trading Investment Portfolio I explained how to find the resistance level with example of Nestle India. I mentioned 4500 was very crucial for Nestle India and used the same level to tap some gains as well on that day.

Now observe the chart of Nestle India on November 14th 2011, the level of 4500 proves crucial yet once again.

So my question to all my reader is – Do you agree that Support and Resistance level works in market? Share your views in comments below.

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Trades in Nestle India on 8th Nov 2011

And if you just look at the trade details you may think I shorted Nestle India at around 10:30 AM in the morning and covered it back at around 2 PM but that is actually not true. Why it is not short selling, let me first tell you some background about Nestle India.

Background

Nestle India is one of my preferred forever stock and it is never ever recommend to short Nestle. (See my list of forever stocks). Nestle India is one of those kind of stock that I have in my portfolio all the time but that does not mean I don’t trade in it. Every time I see weakness in the stock, I reduce my position and then re-enter in it once again at levels I think can be more beneficial to me. (See here where I was out of Nestle and then back again pretty much at the same pricing).

Nestle India has been reporting good results for last 19 quarters (or 5 years) and each good result declaration is followed by profit booking. I anticipated profit booking yesterday because same thing happened in May 2011 as well.

Now you can understand what type of trade I did in Nestle India. I actually offloaded my investment position in Nestle India at around 10:30 AM and got into my investment mode once again at 2PM and in the process pocketing few thousands.

Why the trades?

You may be wondering why I why I was out of my forever stock? The reason I was out because I knew 4500 has been a resistance for Nestle India for quite sometime now and it has retraced back from 4500 many times.

Nestle India Last 6 Months

Yesterday also it hit the resistance in the opening trade and tried breaking out above the key resistance level of 4500. So I was actively watching the stock to see how it performed at the break out with a stop loss of 4470. Once it was below 4470 at around 10:30AM I was out of the stock.

When I was thinking about stop loss I had couple of plans in my mind.

1. Get back into Nestle at around support levels once again.
2. Re-enter in Nestle India when it can decisively close above 4500 and shows a clear breakout pattern.

So I was actively watching the stock and it was under pressure for each 25 Rs with almost no recovery whatsoever.

Nestle India on 8th Nov 2011

At 1 PM I was very keen to get back into Nestle India but as late as I preferably can hold myself.  Ideally around 3PM.

As I was actively watching the stock, I saw a spike in the stock from 4370 to above 4400 levels and I jumped into the trade. Actually it was a panic from my end where I wanted to protect my gains. No regrets and yet another lesson learnt.

Final Thoughts

Long term investing does not mean you cannot make money from your investment trading those stocks and at times intraday. Make sure you watch your investment and grab the opportunity that comes your way.

Share your views and feedback in comments below.

Chart by Interactive Broker’s Trader Workstation

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Official Website: www.gateway-distriparks.com
Business: Gateway Distriparks Ltd is a Container logistics company with Pan-India presence.

Why Gateway Distriparks is Multibagger?

The company has been reporting strong numbers for last few quarters and in the current quarter the company has shown an increase of about 35% in sales and 20% in profit YoY. Better capacity utilization and higher volumes has helped Gateway Distriparks Ltd to post such good result.

Plotting quarterly important results data of GDL from Moneycontrol  we have the following graph

Stock Technical’s

6 months charts of GDL suggest, stock has reacted positively on the back of good results. The stock is near its 52 week high of around 150. My view is the stock will consolidate around the current levels of 140-150 INR for some time before forming a breakout pattern.

Ratios

Presently, Gateway Distriparks is trading in range of 140 to 150 i.e. at a PE of about 17. With 35% sales growth and 20% profit growth, PE expansion is pretty much likely.

Interest cost for GDL is reducing all the time and the company has announced Dividend 3 times in a year’s time suggesting good cash levels for the company.

My Position

Due to very volatile markets and Nifty hitting support of 5200 twice in last 2-3 trading sessions I have a very small long position on this stock at an average purchase price of Rs 144. Yes I do plan to add more as I see more positive clues in the market and stock performs as I expect. My stop loss for the stock is if it breaks 140 decisively. I have scheduled the post to go live after the market close on Friday so you can do you homework on the stock in the weekend and don’t forget my disclaimer.

Share all your questions as well as views on Gateway Distriparks Ltd in comments below.

Update 14th Nov 2011: The stock is trading below 140 and make sure you make the right trading decision. I am out of the stock currently.

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Nestle India

Neslte Being a Giant player has not cracked much below 4200 support levels but has consolidated around the levels of 4200 since then. Nestle India can be a good buy around the same level of 4200 now with a formation of anticipated breakout pattern.

Camlin

Camlin crashed to 50 odd. Most of the fall can be for the closure of open offer but still the support being broken has proved crucial for Camlin fine chemicals.

What are your views on stock that cracks major support levels?

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Why Nifty Support is at 4,700?

Let us first look at the Daily Nifty chart for last few months.

Charts by Yahoo Finance

Let us observe the chart of Nifty for last few months. We see a low of around 4,750 on 26th September, which was above the August low of 4,720 indicating W formation or a double bottom formation. This clearly suggests strong support for Nifty’s around 4700.

Very detail explanation of understanding double bottom or W bottom is in Chapter 12 of my Technical Analysis eBook.

The Road Ahead

We already know from Signals of Market Crash that Nifty has a strong resistance around 5200. I have shown the same here again in the above chart with red arrows.

Nifty has support around 4700 and resistance around 5200 and so according to me this should be the range for the nifty for next few trading sessions and Nifty should consolidate for a elongated period of time in range of 4800-5200.

Depending on the news flows, RBI action and inflation number we may either see a breakout or break down. Important point to note here is – Don’t assume either breakout or breakdown. Let them happen and then go for it unless you know how to play the anticipated trades.

I expect more positive news on the back cooling OIL in the world market but the bad news will be on the result front where some companies can miss on the result expectation – giving Nifty a tight range.

Action Items

Depending on your investment objective you need to play the market.

1. Investors can buy around the support zone of Nifty i.e. around 4,700 and 4,800.
2. Positional long traders can initiate long positions around 4,800 with stop loss at 4,680.
3. Positional short sellers can initiate short positions around 5,150 with stop loss at 5,250.

If you are not a Nifty trader, you can still invest in stocks that have similar kind of support formation in a downtrend or have already shown a breakout above the resistance level.

What is your view for the Indian Market? Share your views in comments below.

Other similar posts ...

1. Understanding Signals of Market Crash & Sentiments of Retail Investors
2. When to Buy In Market Crashes
3. Why Nifty Around 5600 is in No Trade Zone?