This decade-old blog is formed for sharing useful info from financial world free of cost .All posts here are for reference purpose only. It is advisable to study and learn the investment process and decision making criteria yourself .Users are advised to rely on their own judgement or investment advisor when any making investment decisions. Any investment decision should be taken with your own analysis and risk. The blog is aimed to promote the awareness of stock markets among retail investors.
Bonus: The word itself sounds fancy. Be it at a shopping mall or
online portals. We humans love to get bonuses or free stuffs. Stock
markets are no exception. Retails investors get fascinated by the word
'Bonus'. The moment they hear a bonus announcement of a company, they
rush to buy its shares. You have often seen a share price roaring just
because a bonus issue has been announced.
But is the greed for these kind of freebies good for retail investors?
ONGC Reaction to Bonus Issue
Just have a look at the chart of Oil and Natural Gas Corporation.
It announced a bonus issue on 24 October 2016 when it was trading at
185. Post the announcement it rallied and hit a high of Rs 208 in just
one and half months, up more than 12%. The sentiment drove the price up.
But as soon as it came out with a bonus issue on 15 December 2016,
the downfall started. It's been more than three-months now and the stock
is trading 10% below its ex-bonus price.
A company issuing a bonus share is said to be cash rich. Then why do you think the price fell after the bonus issue?
The reason can be simple. Bonus shares are additional shares that are
flooded into the market by a company. This increases the supply of
shares and as a result the prices fall.
Also certain speculators invest in them for bonus gains. Once the
bonus story is over, these speculators start dumping their shares and as
a result the prices tumble.
Whatever the reason may be, the price fell after the bonus was issued.
Bonus issue might not be the only reason driving the stock prices
down. There are of course various other factors affecting a stock price
at a time. But this kind of price decline was observed not only in the
case of ONGC.
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Many retail investors are waiting for the day MRF
announces a stock split. But should you jump on to buy when it does?
Sure you can. But retail investors must understand that just because the
stock looks affordable after the split, it doesn't mean it is a good
buy.
There is a huge difference between value and price.
MRF at Rs 500 after the split can be expensive, and MRF at Rs 90,000 can still be cheap. Basing your decision on price alone is a fool's play.
Companies often go for a split intending to sub-dividing the stock
price to make it 'appear' cheaper. The practice is more common in bull
markets. They usually do it to appease retail investors. It helps them
create liquidity and marketability for their stocks.
But a stock split is a trap for retail investors, especially short-term investors.
Just have a look at the chart of Grasim Industries. The company split its share in a ratio of 10:2 on 6 October 2016. And the stock was 11% down one month after it split.
Grasim Industries Reaction to Stock Split
It was also the case for Asian Paints in July 2013 when it split in a ratio of 10:1. The stock fell 23% one month later. That is a huge underperformance.
These are well-reputed blue-chip companies. But still the stocks sold off after the split.
Why do you think this happens?
The reason is supply. The number of outstanding shares in the market
increases after the stock split. This increased supply results in a
price dip.
But remember, the split might not be the only reason for price
decline. A stock is affected by various factors. And investors must
consider them all before investing.
In an earlier market note, we showed you how share prices fall after the bonus issue. We backed it by data showing 63% of stocks under performing post bonus issue.
We have performed a similar exercise for stocks that have split since
the year 2000. And the results were equally amazing. More on this next
time.
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What
are the top five recommended stocks which I should buy in a surging
market like this, with a holding span of at least 2-3 years from this year 2017?
Some
people Says “Don’t invest, market at life time high” but what if
today’s high is tomorrow’s low, so don’t go by lifetime high, invest in
growing stocks to get better return in 2–3 years. Growing stocks doesn’t
see lifetime high they grow by their own.
RBL Bank (Bank)
Jubilant Life Science (Pharma)
DHFL (Housing Finance)
Force Motors (Auto)
Ujjivan Finance (Micro Finance)
Don’t
hurry in putting all money in one go, Invest at regular time period and
if there is some major event then invest in small qty so that you can
get more shares in case or market correction. Good to focus on Banking
and Finance sector
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“Banks will rally”. That’s my wording towards people asking me what will be next to rally in market.
Yeah!
One can buy SBI at current market price i.e. 289. If you are buying for
short term gain then hold till 320 level in next 2–4 months. It’s major
resistance around 320–325 level. Will tell you this by Practical.
Below is the weekly chart of SBI of last 15 years. I will put y techniccal knowledge into it
That’s
the chart after applying technical, you can see the trend lines and the
first two Rectangle box is there for giving you insight that whenever
it touches the trend line, it falls after touching.
So
After zooming into the last rectangle, i got that it will go upto 320
level in next 2–4 months. ( probably in the month of June it will touch
this level.
So SBI may reach 320-340 level easily in next 2–4 months.
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Most of us get SMS from unknown sources giving recommendations on next multi bagger stocks.
Lets take a case study to answer the basic question that comes in our mind.Shall I buy shares of the stock which are recommended on SMS?
Soem time back I got an sms giving buying call for Symbiox Investment Trading Company
Shall I buy shares of the Symbiox Investment Trading Company?
If you want to lose 20–35% of invested amount, then you can buy that share.
That’s
a Manipulated share, Don’t rely on messages you got on your mobile
saying “ Buy Symbiox Investment, News of merging, or giving bonus”
That’s all operator game of trapping small investor at higher price and
then they put lower circuit on it by placing sell order at day’s lower
limit, so it continuous for weeks, In this whole process share price
fall by 20–40% in 2–3 weeks and operator again buy shares at lower price
from weak hands.
Will take example of operator driven share.
A=
Price remains same for period of almost 7–9 months, That’s never
happen, It’s a market where price changes every second but here it
didn’t
B = Volume rises suddenly,
Because they start circulating messages of buying the share and as a
result retail investor trap in the Operators game.
after that share price drops from 22 to 14 almost 37% vanished from your investment
C =
Again Circulating of messages starts and some more retail investors
trapped in this, after that again price drops from 16 to 11 almost 32%,
Now
that’s your decision if you want to lose your money then you can take
position in that otherwise there is good saying in hindi “ समझदार को इशारा काफी है”
Here’s
list of all operator stocks: Necc, Appu marekting, Vardhman Poly, Arnav
Corporation, kushal Tradelink, willamogor, Acasia, Supreme Tex mart,
Anchal Investment, Quest financial, Ln Industries, Sanguine Media,
Panafic, Symbiox, Etil, Siddarth business, sawaca finance, Safal
securities (Don’t buy any of these stocks you will lose your hard earned
money)
IFB Industries: IFB
Industries Limited is engaged in engineering and manufacturing of
diverse parts and accessories for motor vehicles. The Company is also
engaged in the business of manufacturing and trading of home appliances,
and manufacturing of fine blanking components. Its segments include
Engineering and Home Appliances.
If you see at
the chart it’s showing Bolinger Bands ( technical Indicator) Expanding
that’s means it will continue to run towards north side, That’s a Weekly
chart so don’t confuse it with day chart.
CMP is 640 Buy between 630–645 Level, We can see level of 780–840 level in next 4–6 months
Still
If you are not convinced I have another Technical Indicator called
Parabolic SAR that’s for confirming that the stock trend will remain the
same or it will reverse. Here SAR means Stop and Reverse, As in Below
chart you see that there are dots in above or in below candles that’s
for understanding the trend of a Share price, If Dots are below the
candle sticks that’s means stock trend is up and If dots are above the
candle sticks that means it show downtrend in particular share price.
One more important thing here we have to see is the distance between
dots, If distance is same that’s means stock is consolidation and if
there is some variance in that, it means stock is picking up speed (
dots below candle stick denotes uptrend) and can go upward direction in
near future, like it happening in IFB chart. ( It’s a Weekly chart).
I think that’s enough for this stock, Invest safe and earn money.
As
questioner said “NO Recommendation” I’m am not Charging anything from
anyone, Just helping people to invest in safe asset because as a retail
investor i had seen how brokers trap new investors just for gaining
brokerage they put investors hard money in risky asset.
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If
bonus shares are funded from reserve funds and the face value of the
share remains unaffected, why does it reduce the price of the share?
Companies
issue bonus shares to encourage retail participation and increase their
equity base.
When price per share of a company is high, it becomes
difficult for new investors to buy shares of that particular company.
Increase in the number of shares reduces the price per share.
But the
overall capital remains the same even if bonus shares are declared.
That’s rule of market reduce the price as per ratio of bonus, That’s apply in whole world.
However,
companies in general like to use bonus issues as a statement of their
strong fundamentals going forward. It reflects their capability of
servicing their increased capital.
Companies also use bonus shares to
improve participation and liquidity in their company.
While
the issue of bonus shares increases the total number of shares issued
and owned, it does not change the value of the company.
Although the
total number of issued shares increases, the ratio of number of shares
held by each shareholder remains constant.
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The
de-merged arm of IDFC, IDFC Bank is a listed private sector bank among
the 19 private banks with the promoter IDFC holding 53%, with a market
cap of Rs. 20,000 cr and currently traded at a price of Rs. 59.85. The
stock listed on 06th Nov 2015 at a price of Rs. 72 and fell 5% intraday
on the day of listing itself.
After that it has
stabilized itself, though the traded volumes have dropped by 88% since
the day of listing as compared to today.
Before
I highlight the stock information, It is important to see the
performance of other banks in this sector. Over a 1 year period, banking
stocks have performed well and stocks like DCB Bank, Lakshmi Vikas
Bank, Federal Bank have given a return of 100% and there are other banks
which have given atleast 50% returns in the same period.
IDFC Bank has given a 26% return over 1 year, better than large banks like ICICI, Axis etc.
Now, coming to specifics on IDFC Bank, the basic info is as follows. I hope I don’t have to explain P.E., P/BV, F.V. etc.
The
2 year returns on this stock are negative (-15.7%). The stock is
currently trading below its 30, 50, 150, 200 day moving averages.
I
don’t think you need a CA or a financial analyst to look at the
quarterly numbers and balance sheet to decide if they are good or bad.
The net profit is very wayward and to even look for a trend we need to get the Q4 results before any analysis can be done.
If
you compare this bank with other bank’s financials, the numbers are not
that outstanding where in you can invest and forget about this stock
for the next 2 years.
Whatever
the case might be, since the bank has not completed even 2 years of
listed operations, it is better to wait, analyse the Q4 results, then do
a peer comparison and finally make a call to invest or not.
As compared to IDFC Bank, DCB & Federal Bank have better operations and financial parameters are much better.
One can consider IDFC Bank Only if they want to hold it for more than 6–7years and above!!
There are much better banks like DCB,Federal bank , City Union Bank, RBL bank and other NBFC like Cholamandalam investments, Edelweiss that may give very good multibagger returns in long term.
Asset
quality of IDFC bank and NPAlevels seem quite depressing as of now. It
will take a long time for their ratings to get upgraded.
IDFC bank has witnessed a sharp rise in gross non-performing assets which
went from 3.1% to 7% of gross advances. Gross NPAs were at ₹3,587 crore
as on end-December. Net NPA ratio increased from 1% to 2.6%.
NPA
ratio is used to measure the asset quality of the bank's loan books.
NPA are those assets for which interest is overdue for more than 3
months. Net NPA ratio above 1% is not healthy. If the NPA ratio for the
last 10 years stays below 1% then that is a sign of good management.
Keep
an eye on IDFC BANK's total provision for non performing assets.
Nothing eats away at a bank's profits more than loan loss provisions. A
huge spike up is not a good sign.
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Author: Amit Jeswani, Founder at Stallion Asset, CFA (USA) & CMT (USA)
I have given a lot of Multibagger Ideas on Qoura Like Ujjivan at 323, DHFL at 300, Edelweiss at 94. Today my pick would be Reliance Capital at CMP of 610. This is not a recommendation, but just for education purpose.
We
at Stallion Asset have learned that the valuation of an NBFC depends on
4 main things 1) Management Perception 2) ROE 3) Credit Quality 4)
Growth.
Reliance Capital is Anil Ambani’s only
good asset and he knows that, lately he had kept an analyst meet and our
analyst did participate in it. We all know that Reliance Capital has a
Anil Ambani Discount to it, Lets understand how much Anil Ambani Discount is there in the Price.
Reliance Capital can be divided in 5 Main Business’
1. Asset management – Mutual Fund Business 51% Stake
2. Life Insurance – 51% Stake owned rest owned by Nippon
3. General Insurance – 100% Stake Owned Reliance Capital
4. Housing Finance – 100% Stake Owned expect to be demerger
6. Other Non Core Asset and Broking – Non Core expected to be Divested
Asset Management Business Valuation- In
October 2015, Nippon Increased stake in Asset management business from
35% to 49% valuing the company at 8500 Crores. Reliance Asset Management
will do a PAT of 340 E for FY 2017, ROE of 50%, if it were listed it
would trade at 30x or valuation of 10,200 atleast. We value Reliance
Asset Management business’ 51% Stake at 5100 Crores.
Life Insurance Business Valuation – We
Value Life Insurance using embedded value multiple, HDFC Max Life is
trading at 4.3x Embedded value, whereas ICICI Prudential Life trades at
3.4x Embedded value. Reliance Life Insurance has a embedded value of
3074, if it were listed it would definitely trade at 3-3.5x. Therefore
the fair value of Life Insurance Business would be about 10,000 crores,
since RCap has 51% stake in it, we value it at 5100 Crores. This
Valuation has been confirmed with Nippon investing 5,327 crores in 2016
for a 49% of Life Insurance business valuing the company at 10,871
crores.
General Insurance Business Valuation – Reliance
General Insurance business has grown at 25% for last 5 years and now
commands a private sector market share of 8.3%. Its expected to report
profits of 70 Crores in 2017 and has equity invested of 1200 Crores. We
believe margins can improve considerably here and value it at 3,000
crores.
Housing Finance – The current
AUM is ~10000 Cr with a conservative Gross NPA ratio of 0.9%and by FY20E
expect it to be ~50000 Cr . The Equity Invested in HFC business is 885
crores.The HFC business has grown 30% over last year and it’s expected
to do a profit of 90 crores in FY2017 with an ROE 10%. We value this HFC
at 3xbook at 2650 crores. They are into affordable housing with average
ticket size of less than 10 lakhs and may command higher valuations.
Reliance Commercial Finance
– There has been appointment of Mr Mody as CEO, who was the erstwhile
President of the consumer finance business of Bajaj Finance and leverage
on his expertise in tapping SME lending segment. The current AUM is
16000 Cr . The Equity Invested in RCF business is 2195 crores. The
business has grown 10% over last year and its expected to do a profit of
200 crores in FY2017 with an ROE 9%. We value this RCF at 2xbook at
4400 crores.
Other excess investments are valued at 3,000 crores and will be liquidated soon.
Conclusion – Reliance
Capital if owned by someone else would trade at about 920/per share
with current financials. NBFC is in a bull market, and at the end of the
bull market the PIGS run faster than the Horse. Investors with high
risk appetite can have a serious look at reliance capital on dips. Worse
case investors lose 20%, best case you get a 1 bagger.
Disclosure – Amit Jeswani and Family have no positions
This is not a recommendation and just for Education Purpose.
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Karnataka Bank (Private bank is valued like a PSU bank, definite multibagger. look for 3 year timeline)
VIVIMED - into speciality chemicals and API drugs. sure shot 30% in 1 year timeline (conservative, downside limited at 75)
Selan
exploration - debt free company, into oil exploration. looking for a
very short timeline (1 year) 40–50% return. ( downside is there. caution
while investing)
TCI express - one of my favourite stock.
waiting for a blast. definitely next bluedart. excellent management. GST
trigger. Reco from lot of analyst. must keep in portfolio. presently in
par with industry valuation. will go big. 30% in 1 year timeline
Trigyn Technologies. tech company that is appointed by US Govt for its internal projects. sure shot 30% in 1 quarterBuy @115. Company
has recently won a 12 year indefinite billing contract from IT dept of
Maryland. Much more to come. pick it up b4 FII/MF guys enter (Target Rs.
160 over next 6 months)
Mahindra Life space – Its a good buy at current levels. add up at CMP 409.
Target Rs. 500 in 1 year timeline. Company is into affordable housing
segment and has been moving into that space. given the budget
inclination towards affordable segment, majority of real estate stock
bursted post demonitisation effect. however, mahindra didnt pose out.
its a sure shot 2 bagger if you have a 2 year timeline. buy and forget.
UFLEX. they are into packaging segment and
have a vast customer background from frito lays to parle. The company is
fairly leveraged and is presently operating out of mexico and europe.
Time to look out for UFLEX. it will definitely be a multibagger over the
years. Low PE and good ROE stock. Must buy at current levels and dip.
Target 400 (CMP – 311)
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Disclaimer : All information given here is for information purpose only. Users are advised to rely on their own judgement or investment advisor when making investment decisions. This blog is not liable and take no responsibility for any loss or profit arising out of such decisions being made by anyone acting on such advice.
Disclaimer && Decalration
This blog is formed for sharing useful information from financial world. This blog aims to increase the awareness among the people so that they are well informed .The blog also shares some details for investor, trader ,newbie friends in stock market on free buy/sell/hold recommendations.
Here the recommendations are shared along with information on Stock Splits, Right Issues, Bonus Issues, Latest Stock market updates.
This publication is not, and should not be construed to be, an offer to sell or a solicitation of an offer to buy any security. This publication, its publisher, and its editor do not purport to provide a complete analysis of any company's financial position. The publisher and editor are not, and do not purport to be, registered investment advisors. Any investment should be made only after consulting a professional investment advisor and only after reviewing the financial statements and other pertinent corporate information about the company. Investing in securities is speculative and carries a high degree of risk. Past performance does not guarantee future results. This publication is based exclusively on information generally available to the public and does not contain any material, non-public information. The information on which it is based is believed to be reliable. Nevertheless, the publisher cannot guarantee the accuracy or completeness of the information. This publication contains forward-looking statements, including statements regarding expected continual growth of the featured company and/or industry. The publisher notes that statements contained herein that look forward in time, which include everything other than historical information, involve risks and uncertainties that may affect the company's actual results of operations. Factors that could cause actual results to differ include the size and growth of the market for the company's products and services, the company's ability to fund its capital requirements in the near term and long term, pricing pressures, etc.
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