5 Stocks for next week 19th-23rd March 2018

5 Stocks for next week 19th-23rd March 2018
by Gautam Upadhyaya 16/03/2018
Untitled Document

 

1) Shriram City Union Finance Limited- BUY


Stock

Shriram City Union Finance Limited

Recommendation

The stock has given a breakout from a declining trend line backed by a smart uptick in volume on the weekly chart. The stock has also witnessed a bullish crossover on the weekly MACD indicator, which affirms our bullish stance.

Buy/Sell

Range

Target

Stop Loss

BUY

2,136-2,154

2,280

2,040

NSE Code

Market Cap (in Rs cr)

52-week high/low

200 DMA

SHRIRAMCIT

14,161

2,648/1,867

2,079


 

2) ADANIPORTS – Sell

Stock

 ADANIPORTS

Recommendation

The stock is trading in a lower top-lower bottom chart structure and has given a breakdown from a symmetrical triangle formation on the daily chart. Derivative data indicates fresh short formation.

Buy/Sell

Range

Target

Stop Loss

SELL (March Futures)

372-375

355

387

NSE Code

Market Cap (in Rs cr)

52-week high/low

200 DMA

ADANIPORTS

76,511

451/317

389


 

3) Escorts Limited - Sell


Stock

Escorts Limited

Recommendation

The stock has witnessed a breakdown from a descending triangle formation on the daily chart. It has given a close below its 10-day EMA and has also observed a bearish crossover on the weekly MACD indicator.

Buy/Sell

Range

Target

Stop Loss

Sell(March Futures)

835-840

804

865

NSE Code

Market Cap(in Rs cr)

52-week high/low

200 DMA

ESCORTS

10,135

921/513

717


 

4)Voltas Limited - Sell


Stock

Voltas Limited

Recommendation

The stock has given a breakdown below its rising trend line on the daily chart. It has also formed a bearish engulfing candlestick pattern on the daily chart.

Buy/Sell

Range

Target

Stop Loss

SELL (March Futures)

631-635

606

651

NSE Code

Market Cap(in Rs cr)

52-week high/low

200 DMA

VOLTAS

20,746

675/382

557


 

5) Container Corporation of India Limited - Sell


Stock

Container Corporation of India Limited

Recommendation

The stock has witnessed a flag pattern breakdown on the daily chart backed by a surge in volumes. Derivative data suggests fresh short formation in the stock.

Buy/Sell

Range

Target

Stop Loss

SELL (March Futures)

1,208-1,216

1,155

1,252

NSE Code

Market Cap(in Rs cr)

52-week high/low

200 DMA

CONCOR

29,319

1,500/976

1,284


Research Disclaimer

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Let your money work for you

Let your money work for you
16/03/2018

Albert Einstein once said, “Compound interest is the eighth wonder of the world. He who understands it, earns it, he who doesn’t, pays it.” If you want your money to work for you, you will have to consider Einstein’s quote and learn to manage your wealth efficiently.  For this, one needs to have a financial plan that ensures smart investments to yield high returns on your hard-earned money. Investments in the stock market, among others, can provide you with this opportunity.

Let’s us take a closer look at these investment vehicles:

1)    Equity

Investing in the equity markets means buying shares of a listed company. In doing so, one becomes a minority owner/stakeholder of the company and is liable for the profit and loss the company incurs.

The way to equity investments is through trading in the stock markets, where one can buy and sell shares of public companies. The buying and selling are done through a broker after doing a thorough analysis of the company you wish to invest in.

This instrument, however, is considered risky, as one’s funds are mostly dependent on the company’s performance.

2)    Mutual Funds

Mutual funds are financial instruments which pool a variety of stocks of different companies from different sectors to form a portfolio. Thus, the risk involved with trading in the equity markets is divided amongst a bunch of stocks that have been selected to give the best returns.

A fund manager usually manages a mutual fund. Depending on the investor’s appetite for risk, mutual funds are divided into high-risk (aggressive), medium-risk (moderate), and low-risk (conservative) categories.

The main advantage of this instrument is that it is less risky when compared to equities and the investor has the liberty to invest smaller amounts over a period of time as opposed to investing a lump sum. This is called a Systematic Investment Plan (SIP). SIP allows an investor to start investing amounts as low as Rs500 at predefined intervals into mutual funds.

Returns on mutual funds are not as high as those from the equity markets; however, they are better than conventional modes of investment like debt instruments.

3)    Derivatives Trading

Derivatives are financial contracts that derive their value from an underlying asset. These could be stocks, indices, commodities, currencies, interest rates, etc. It is used as a hedging as well as speculating tool, i.e. to make profits by betting on the future value of the underlying asset.

In India, we have mainly two exchange-traded derivatives known as Futures and Options (F&O).

Futures: A futures contract is a contract between two parties where both parties agree to buy and sell a specific quantity of a particular asset at a predetermined price at a specified date in the future.

The buyer of the futures contract is said to have a bullish view on the particular security/index, while the seller is said to have a bearish view.

Options: An options contract offers the buyer the right to buy, but not the obligation, at a specified price or date. Options are available as either Call or Put, depending on whether they give the right to buy, or the right to sell.

Call options give the holder the right to buy the underlying security, while Put options give the right to sell the underlying security. Based on your view of the market, you can consider to buy either a call option or a put option. If you think the price of a security will rise, you’ll buy a call option, and buy a put option if you think it will decline.

4)    Bonds

Government bodies and public and private institutions issue bonds to garner funds for activities like raising capital. These bonds, or fixed-income securities, offer a fixed rate of interest on returns. Government-issued bonds are tax-free and carry lower risk compared to bonds offered by private institutions.

5)    Fixed Deposit (FD)

Fixed deposits, or FDs, are the most common and well-known savings instrument in India. Every bank account holder tends to have a certain corpus invested in fixed deposits. Though the risk associated with these instruments is low, the returns are low too.

Your investment strategy should be carefully analyzed in order to make your money work hard for you. Making the most of the stock market boom in India is a smart way to increase returns. One can also hire professional financial planners and advisors for efficient financial planning and investment management.

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8 big mistakes to avoid in a falling stock market

8 big mistakes to avoid in a falling stock market
01/04/2018

Everyone prefers to invest in a bullish stock market. However, investing in a bearish market is seen as a challenge for investors.

Stock markets have been facing a lot of volatility these days, hence, investors should keep a check of what they do and don’t. Panic leads to hasty moves, as a result paying a hefty price. However, if one is cautious of the commonly made mistakes (listed below), it may help in reducing losses to a great extent.

1). Don’t fixate on a price: Investors tend to anchor on a price, at which they bought the stock. They should carefully analyze the reasons for the falling stock and plan their next move accordingly. They must realize that the price at which the stock is bought is not necessarily perceived as its fair value by the market.

2). Say ‘No’ to buying more to average: Even though this concept has its own benefits, keep reminding yourself that this works only if the fundamentals of the stock are strong. The method of averaging is one of the trusted techniques in stock trading.

3). Be well researched regarding the market updates: Do not ignore any significant development happening in the market based on over confidence. Be well informed and take decisions according to the market trends. Your judgement without information may not always be correct.

4). Don’t be a value picker: Buying stocks at their 52-week low may seem a good bargain, but it might turn out to be a value trap. Markets can be unreasonable for longer periods of time than one can think of.

5). Do not make leveraged bets:  Leverage requires that the investment should earn a return, which is at least equivalent to the interest paid on the borrowed capital (if you have borrowed). However, in case of market dips, it can accrue huge losses too.
There’s a high degree of uncertainty involved in the stock market, which can drive the trends either ways – it can bring panic if one is risking the money that they cannot afford to lose. Alternatively, it can force one to close their positions by limiting their options, if they are buying on margin.

6). Don’t alter your financial plans: It is a human tendency to panic and react frantically in the state of stress. Don’t change your investment decisions and existing portfolios based on the current market trends. Keep a clear sight of your asset allocation.

7). Do not stop your Systematic Investment Plans: One should not stop their SIPs during a bear market. The primary purpose of SIP is to encourage buying more units at lower prices and reaping benefits when the market rebounds. Stopping SIPs at that point interrupts the compounding benefit of equities and affect the long term goals.

8). Do not over diversify your portfolio – One should not over diversify his portfolio that too in multiple companies of the same sector. Though this might help one to limit their downside to an extent, but won’t be of much help in the long run. Diversification beyond a point leads to greater risks, and it becomes difficult to monitor the stocks.

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The ‘right’ way to exit a losing trade

Exit a losing trade

Every trader has his share of bad trades in his portfolio and you do not need all your stocks to be multi-baggers to be successful in the share market. While gains from a stock have no upper limit, the loss from a stock is limited to the value invested in it. Exiting a losing stock is not only a financial loss for a trader, but also an emotional or psychological loss. It is human tendency not to accept losses readily. We have a few recommendations that will help you exit a declining trade.

Let’s take a look

Use stops to restrict your financial losses

Stops are calculated, pre-determined price levels at which the investor chooses to go short or sell his stocks to limit losses. When the stock price hits the stop loss price, a sell order is executed and the stock is automatically sold at that price. Stop loss orders work well as they define the losses beforehand and the loss amount is in the control of the investor. Have a personalized stop loss strategy and use it effectively to limit your losses while investing in stocks.

Keep a check on the stock even after exiting to find a re-entry point

Once you exit a position, keep an eye on it to identify any bullish indication of reversal, which can be a potential re-entry point. Using stops, you might sometimes exit your position because of price volatility. In no time, you may find the prices rising again. However, using proper stops is proven to be effective as it limits your losses in most cases. Analyze the charts, study the candlestick patterns, and re-enter, only, if it coincides with your research and not in hope or revenge. If there is no valid reason to re-enter the trade after the initial exit, walk away and search for new opportunities.

Do not emotionally connect with your stock picks

You should accept your wrong picks and move on rather than lingering onto the stock in the hope of a rebound. You need to monitor and notice the developments around your shares continuously, and if stocks are taking the wrong direction, you will sometimes need to book losses and accept your wrong stock picks. Don’t fall in love with your shares, sell them if the fundamentals do not appear correct and restrict your losses. Booking losses or hedging them at an early stage can help minimize losses.

Accept responsibility and analyze your mistakes and find out where your investment plan can be improved

This will help reduce the chances of the same happening again. Handling trading losses well is a leading characteristic of successful investors. Treat a failure as an opportunity to learn and improve it in your next move. Many opportunities are waiting out there in the market for you to find and grab hold of.

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Top 5 ELSS for 2018

Top 5 ELSS for 2018
by Jitender Singh 01/05/2018

Equity Linked Savings Scheme (ELSS) is a type of equity mutual fund in which investments up to Rs1.5 lakh per financial year are tax deductible under section 80C. In other words, investors don’t have to pay tax on investment up to Rs.1.5 lakh in ELSS. By investing in ELSS, an investor in the 30% tax bracket can save Rs.46,350 as tax.

Below table exhibits the amount of tax one can save by investing Rs.1.5 lakh in ELSS for different tax slabs.

Tax Bracket 5% 20% 30%
Tax Saving Rs.7,725 Rs.30,900 Rs.46,350

*Includes 3% cess also

Besides tax benefits, ELSS investments also offer other benefits discussed below.

  1. Wealth creation with tax-saving – Historically, it has been seen that ELSS schemes have given significantly higher returns than other tax saving schemes like PPF, 5-year FD, EPF, etc.
  2. Shortest lock-in period – ELSS has a lock-in period of 3 years, which is the shortest among all tax-saving instruments.
  3. Tax free capital gains: The long-term capital gains from investment are tax-free.
  4. Dividends are tax-free: Dividends received are tax-free in the hands of the investor right from the year of investment.
  5. Low investment amount: Investors can start investing with Rs500 in lump sum or via SIP in ELSS. Since it is difficult to invest a lump sum amount in one go, SIP helps a person to invest small amounts at regular intervals. SIP payment is auto-debited from your bank account every month.

ELSS is the best way to save tax and create wealth in the long term. Below are the top 5 recommended ELSS funds.

Scheme Name Fund Manager Corpus (cr) 1 Y (%) 3 Y (%) 5 Y (%)
Aditya Birla SL Tax Relief '96(G) Ajay Garg Rs.4,349 41.6 16.3 21.6
Axis LT Equity Fund(G) Jinesh Gopani Rs.15,408 35.7 12.2 22.4
DSPBR Tax Saver Fund-Reg(G) Rohit Singhania Rs.3,571 34.4 15.6 20.1
IDFC Tax Advt(ELSS) Fund-Reg(G) Daylynn Pinto Rs.798 52.2 17.4 21.6
Reliance Tax Saver (ELSS) Fund(G) Ashwani Kumar Rs.10,157 44.2 13.3 22.4

1 year returns are absolute; 3 year and 5 year returns are CAGR.
AUM as of November 2017, Returns are as on January 02, 2018

Aditya Birla SL Tax Relief ‘96 Fund

  • Aditya Birla SL Tax Relief ‘96 Fund does tactical allocation between large cap and mid-= cap stocks to ensure optimal risk reward.
  • As of November 2017, the fund has invested ~37% of its AUM in large cap stocks, ~55% in mid cap stocks and ~7% in small cap stocks to generate higher returns.

Axis Long Term Equity Fund

  • Axis Long Term Equity mutual fund  invests in companies with sustainable profit growth to generate wealth over 3-4 years.
  • Besides, the fund manager follows bottom-up approach to select the companies.
  • As of November 2017, the fund has invested ~66% of its AUM in large cap stocks while ~30% in mid cap stocks to generate alpha.

DSPBR Tax Saver Fund

  • DSPBR Tax Saver Fund primarily invests in large cap stocks with some tactical allocation to midcap and small cap stocks to generate higher returns.
  • The fund manager follows buy-and-hold strategy for majority of the portfolio. He also takes active and tactical calls to exploit the market opportunities.
  • As of November 2017, the fund has invested ~71% of its AUM in large cap stocks and ~22% in mid cap stocks to generate higher returns.

IDFC Tax Advantage (ELSS) Fund

  • IDFC Tax Advantage (ELSS) Fund does tactical allocation between large cap, mid cap and small cap stocks to generate higher returns.
  • As of November 2017, the fund has invested ~46% of its AUM in large cap stocks, 29% in mid cap stocks and 20% in small cap stocks in order to generate higher returns.

Reliance Tax Saver (ELSS) Fund

  • Reliance Tax Saver (ELSS) Fund does tactical allocation between large cap, mid cap and small cap stocks to generate high returns.
  • The fund invests in potential leaders with high growth prospects.
  • Generally, the fund takes 2-3 sector call at a time and invests in high conviction mid cap stocks.
  • As of November 2017, the fund has invested ~60% of its AUM in large cap stocks, 25% in mid cap stocks and 15% in small cap stocks in order to generate higher returns.

Research Disclaimer

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5 Stocks for next week 8th Jan-12th Jan 2018

5 Stocks for next week 8th Jan-12th Jan 2018
by Gautam Upadhyaya 01/05/2018

AJANTA PHARMA - BUY

Stock AJANTA PHARMA
Recommendation The stock has managed to give a breakout from its sideways consolidation on the daily chart. The stock has also shown good strength on the daily and weekly MACD Histogram.
Buy/Sell Range Target Stop Loss
Buy(cash) 1518-1525 1590 1474
NSE Code Market Cap(Rs in Cr) 52-week High /low 200 Day M.A
AJANTPHARM 13385 1870/1106 1418

JUST DIAL - BUY

Stock JUST DIAL
Recommendation The stock has given a flag pattern breakout and has also breached the declining trend line backed by a surge in volumes on the daily chart. The stock has taken support along the 10-day EMA on the weekly chart. 
Buy/Sell Range Target Stop Loss
Buy(cash 548-552 584 527
NSE Code Market Cap(Rs in Cr) 52-week High / low 200 Day M.A
JUSTDIAL 3697 619/326 459

NIIT TECH - Buy

Stock NIIT TECH
Recommendation The stock has given a breakout from its sideways consolidation on the daily chart backed by a surge in volumes; the stock has also taken support along the rising trend line on the daily chart.
Buy/Sell Range Target Stop Loss
Buy(cash) 666-671 698 648
NSE Code Market Cap(Rs in Cr) 52-week High /low 200 M.A
NIITTECH 4085 696/401 558

INDUSIND BANK - BUY

Stock INDUSIND BANK
Recommendation The stock has managed to give a breakout above the declining trend line on the daily chart and has managed to give a breakout from its sideways consolidation on the weekly chart. The stock has also witnessed bullish crossover on the daily MACD indicator which affirms our positive view on the stock.
Buy/Sell Range Target Stop Loss
Buy (cash) 1690-1700 1758 1657
NSE Code Market Cap(Rs in Cr) 52-week High / low 200 M.A
INDUSINDBK 101955 1818/1137 1562

INDIAN OIL CORPORATION - SELL

Stock INDAIN OIL CORPORATION
Recommendation The stock is in a lower top lower bottom chart structure on the daily chart and has given a close below its support levels. The weakness shown on the MACD histogram accentuates our negative view on the stock.
Buy/Sell Range Target Stop Loss
SELL-Jan Futures 385-387 374 393.2
NSE Code Market Cap(Rs in Cr) 52-week High /low 200 M.A
IOC 186369 462/341 393

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