Tuesday, 12 July 2016

Low P/E Sectors

The following sectors are low P/E and could be ripe for investing. Of course, it all depends on how much faith you have in the future of these sectors. It also depends on your risk capacity. Money can get locked in the equity market for a long time if the timing is bad.

The broad markets are NOT ripe for investment as of now in my opinion.

Images ctsy craytheon.com. These images may not be republished without permission of craytheon.com



Sunday, 29 May 2016

A Case For Passive Investing

Perhaps it's best to just adopt a passive, laid back attitude towards investing....




Tuesday, 26 April 2016

Paralysed Hands to Rs. 600,000 in One Day

True inspiring story of a handicapped lady trader who once profited Rs. 600,000 (9,000 U.S.D) in a single day.

© REDIFF. All rights reserved.

Sujata Burla’s life took an ugly turn on June 9, 2001. On a pilgrimage to Shirdi, where the Sai Baba temple in Maharashtra is located, from Hyderabad, she met with an accident.

Four months later, the doctors and physiotherapists treating her told her she could not walk for the rest of her life. The accident had turned her into a paraplegic. It meant Sujata was immobile below the shoulders. She was just 21.

Not one to be easily cowed down by her circumstances, she started learning about the stock markets that year. When she was ready, she took an unsecured loan from a bank and started trading.

Now she trades like a pro and earns anywhere between Rs 200,000 and Rs 250,000 every month. On a day like Wednesday, September 19, 2007, when the Nifty was up 186 points, Sujata made a cool Rs 600,000 in a single day. She has still not sold her position.

“I expect the Nifty to touch 4800 in the next two, three trading days. I will sell my position then,” Sujata told this correspondent in a telephone conversation from her home in Hyderabad.


Sujata moves around in a wheelchair and does not regret this fact. Financial independence is what she strove for and that is exactly what she has got through sheer determination and discipline.

How do you cope with such a trauma?

Before, I could not even write or type. Now I have got used to it. I can easily type and trade on my computer and laptop.

In the first four months after my accident I did not even know I would never be able to walk again. I went into a depression feeling that this was the end of life for me.

Does your condition make you dependent on others?

I am the kind of person who doesn’t like to depend on anybody — whether financially, physically or mentally. So, it was very tough for me to physically depend on somebody. I soon realized that financial independence could get me much more freedom in life.

So I started thinking how I could earn money. I worked with my sister, who is a fashion designer, and learned a bit about it. I soon started a textile workshop where I employed 10 people. However, the workers took undue advantage of my physical disability leading to losses. I closed my workshop and moved towards stock market trading.

How did you get into the stock markets?

I realized that if at all I have to succeed in life I would have to do something for which I don’t have to depend on anybody. Through a friend of mine I came to know about the stock markets in 2004. It took me almost a year to understand the various nuances of the stock market and it was in 2005 that I actually started trading.

What was your first trading/investment experience like?

My first investment was in blue chip companies like Reliance Industries, Hero Honda, ACC and IDBI. However, the Rs 100,000 that I invested did not earn me any returns. It was my first investment and I did not know when to sell or the right time to sell my stocks. That learning experience helped me to hone my skills in the stock markets.

How much do you make from trading in stocks now?

My turnover for a month is over Rs 3 crore. But my actual investment is only Rs 15 lakhs. I make anywhere between 10 to 15 per cent per of this investment per month. It is like I earn 20 to 30 per cent sometimes and lose 10 per cent at other times. This takes my average monthly return to 10 to 15 per cent every month of my total investment of Rs 15 lakhs.

Could you share your success mantras for our readers?

* Read all the advice that you get from various business television channels, newspapers, friends who understand the stock markets but be extremely cautious and disciplined when you act on this advice.

* Never extend your trading bets beyond your means. I speak to my friends; get investment and trading ideas from my brokerages (she is registered for online trading with Reliance Money, Indiabulls and Kotak Securities).

How would you identify yourself as a stock market player?

I am a short-term trader; I am surely not a long-term investor.

Do you trade intra-day?

Well, if my bets appreciate considerably then I take home my profits on the same day. Otherwise, I wait for my investments to bear at least 7 to 8 per cent returns before I actually sell it.

Intra-day trading, though, is very risky as most traders tend to burn their fingers trying to time the market. And I have lost quite a bit of money trading intra-day in the cash market, believe me.

How much have you deposited with all these brokerage companies?

As I told you earlier, my total deposit with all the three brokers is Rs 15 lakhs. Using this amount I buy Call Options within my overall limits. There is no concept of margin money in options. Whatever money I have earned till now is only through Option trading. You can do risk-less trading in Options using a small amount.

As a safe strategy I never write a Put Option. Put Options are very risky. That way I am a very safe trader. In Puts I can even make 50 per cent a month on my investments; but then I can lose the same amount too. My principle is if I make money I make it; I shouldn’t lose money at all.

I usually write a Call Option on the Nifty. I am always long (buying first and then selling at a higher price to make profit) on the markets and whenever the market is too overbought I wait for the markets to cool down.

The last two days turned out to be very good for the stock markets. How much did you make in these two days?

Actually, it is celebration time for me. I made 80 per cent returns today (September 19, the Nifty was up 186 points or 4.09 per cent). Most of the Nifty Calls went up by 80 per cent today. However, I did not invest the entire Rs 15 lakhs because I am sitting on a bit of cash as the markets have run up too fast in the recent past. I invested only 50 per cent of Rs 15 lakhs on which I made an 80 per cent return (Editor’s note: That’s a cool Rs 600,000; don’t rub your eyes in disbelief; you read it right!).

However, there are times when I lose a big amount of money in trading. Such gains happen only once in a lifetime. The losses that I make during the year sort of offsets such gains.

But remember that these things don’t happen every other day. I have still not booked my profits. I am still holding on my positions. I plan to sell them after a day or two because I feel that the markets can still go up — at least for the next two, three days — based on the strong momentum. I am expecting the Nifty to go up to 4800 at least.

Actually, the target given by one of my brokerage houses is 4900 but I am going to book profits at 4800 levels. Too much greed is also not good, is it?

Moreover, it is the festive season and Diwali is just round the corner. Normally, the markets go up during Diwali. There will be some profit booking (a situation when a trader sells her/his stocks at a profit) tomorrow and the day after that but the general mood is likely to remain bullish till Diwali. I don’t expect a market crash or correction till Diwali.


Wednesday, 17 February 2016

A Look at Indian PEs


The first question is...why look at the P/E? This video explains it.



On to the blog entry.....

In case of an Index, simplistically speaking, the P/E represents the ratio of the combined market price of the companies that form the index, and their combined earnings i.e., "index earnings".

Mathematically, it is \[\frac{combined\ stock\ price\ of\ Index\ companies}{combined\ EPS\ of\ Index\ companies}\]

where EPS = Earnings Per Share.

A stock P/E or Index P/E ratio changes in the following manner:

1) Directly proportional to stock price or combined stock price of Index companies.

2) Inversely proportional to company EPS or combined EPS of Index companies.


A very high PE could mark the end of a rise in the Index, i.e. mark the beginning of a falling trend in the Index.

Index P/Es, updated 17th Feb, 2016.

All data and charts © Craytheon. Published with permission. You may not republish the following data without Craytheon's written permission.


1) Nifty PE Ratio on 17-Feb-2016 is 18.67. ( Long term average is 18.65)

Nifty historical returns seen from the P/E point of view:



Updated Feb 17, 2016.


images © Craytheon


NIFTY Auto sector PE is 34.87. Long term average is 23.6. Current Auto PE is 47.9% higher than long term average.

The Nifty Auto Index is designed to reflect the behaviour and performance of the Automobiles sector which includes manufacturers of cars & motorcycles, heavy vehicles, auto ancillaries, tyres, etc. The Nifty Auto Index comprises of 15 stocks that are listed on the National Stock Exchange. The Nifty Auto Index represents about 90.69% of the free float market capitalization of the stocks forming part of the Automobiles sector universe as on March 31, 2015.
____________________________________________



Bank Nifty PE is 14.52. Long term average is 12.8. Current Bank Nifty PE is 13.9% higher than long term average.

Nifty Bank Index is an index comprised of the most liquid and large capitalised Indian Banking stocks. The index has 12 stocks from the banking sector which trade on the National Stock Exchange and represents 92.22% of the free float market capitalization of the stocks forming part of the Banking sector universe as on March 31, 2015.
____________________________________________




CNX NIFTY IT PE is 17.91. Long term average is 24.8. Current CNX IT PE is 27.8% lower than long term average.

Companies in this index are those that have more than 50% of their turnover from IT related activities like IT Infrastructure , IT Education and Software Training , Telecommunication Services and Networking Infrastructure, Software Development, Hardware Manufacturer’s, Vending, Support and Maintenance, and represents 96.66% of the free float market capitalization of the stocks forming part of the IT sector as on March 31, 2015.
____________________________________________



NIFTY FMCG PE is 33.90. Long term average is 34.5. Current FMCG PE is 1.8% lower than long term average.

FMCGs (Fast Moving Consumer Goods) are those goods and products, which are non-durable, mass consumption products and available off the shelf. The Nifty FMCG Index comprises of 15 companies who manufacture such products which are listed on the National Stock Exchange (NSE). Represents 82.42% of the free float market capitalization of the stocks forming part of the FMCG universe as on March 31, 2015.

 ____________________________________________



Infra sector PE is 19.22. Long term average is 23.6. Current Infra PE is 18.5% lower than long term average.

The Nifty Infrastructure Index represents about 9.00% of the free float market capitalization of the stocks listed on NSE and represents 80.74% of the free float market capitalization of the stocks forming part of the infrastructure sector universe as on March 31, 2015.
____________________________________________



Nifty Midcap 100 PE is 21.54. Long term average is 16.6. Current Nifty Midcap PE is 29.9% higher than long term average.

The Nifty Midcap 100 Index represents about 13.86% of the free float market capitalization of the stocks listed on NSE as on March 31, 2015.
____________________________________________



Nifty Junior PE is 20.62. Long term average is 15.2. Current Nifty Junior PE is 36.0% higher than long term average.

CNX Nifty Junior Index represents about 12.02% of the free float market capitalization of the stocks listed on NSE as on March 31, 2015.
____________________________________________




NIFTY Pharma sector PE is 42.03. Long term average is 42.9. Current Pharma PE is 2.0% lower than long term average.

This Index represents 78.29% of the free float market capitalization of the stocks forming part of the Pharmaceutical sector universe as on March 31, 2015. 
____________________________________________



NIFTY PSU Bank Index is 8.39. Long term average is 9.5. Current PSU Bank Nifty PE is 11.6% lower than long term average.

NIFTY PSU Bank Index represents PSU Banks, and  represents 91.81% of the free float market capitalization of the stocks forming part of the PSU Banks sector Universe as on March 31, 2015.


But there's always second thoughts!

Tuesday, 26 January 2016

The lure of the Quick Buck

This post explains how I selected "Texmo Pipes", a stock that gave me 136% returns in about 44 days.

Purchase details: 23/11/2015, price 10.88
Sale details: 7/01/2016, price 25.75


Warning: Don't try this at home..

Tuesday, 12 January 2016

Quick Look: Plastics

All data © Moneycontrol.com:

Name Last Price Market Cap.
(Rs. cr.)
Sales
Turnover
Net Profit Total Assets
Supreme Ind 704.20 8,945.23 4,254.68 315.71 1,452.34
Astral Poly Tec 430.05 5,090.29 1,252.65 68.84 724.79
Jain Irrigation 72.30 3,343.26 4,241.75 49.39 5,240.29
Responsive Ind 110.90 2,960.06 1,513.54 33.19 1,019.87
Nilkamal 1,472.75 2,197.71 1,786.66 42.46 661.60
Mayur Uniquoter 458.45 2,121.60 506.32 65.90 319.95
VIP Industries 97.95 1,384.20 1,047.70 47.90 338.03
Arrow Coated 788.50 925.69 19.89 6.55 22.00
Plastiblends 460.05 597.82 494.35 30.05 177.90
Cosmo Films 306.55 597.77 1,478.74 40.41 805.12
Mold-Tek Pack 301.15 417.25 285.03 16.87 130.18
Hitech Plast 193.95 294.33 295.52 7.14 207.66
Hydro SandS Ind 271.10 274.10 218.79 -3.04 83.46
Tainwala 227.10 177.14 183.16 7.61 81.56
Pil Italica 17.75 93.19 41.39 1.96 -0.53
Jain Irrig (D) 46.15 89.04 -- -- -
Texmo Pipes 28.15 67.05 243.98 3.31 172.74
Tokyo Plast 67.30 63.94 54.90 3.27 64.28
Premier Polyfil 28.25 59.18 85.82 2.73 40.83
Tainwala Chem 44.85 42.00 9.84 2.03 40.57
Kemrock Indus 20.60 41.88 72.02 -275.27 1,153.82
Kriti Ind 8.15 40.43 362.32 2.69 90.12
Pearl Polymers 21.60 36.36 200.62 -2.51 79.31
Sanco Ind 38.90 33.34 -- -- -
Tulsi Extrusion 6.40 17.60 89.19 -96.70 189.39
Tijaria Polypip 6.00 14.18 69.28 -9.15 119.32
Ahimsa Ind 25.00 13.68 -- -- -

Wednesday, 6 January 2016

Case Study: Suven Life Sciences

Public sentiment via moneycontrol boards: Comments

Public Sentiment from the charts: Excellent as reflected by the rising OBV and Price-Volume curves below.

Thursday, 10 December 2015

Quick look at some pharma

Name Last Price Market Cap.
(Rs. cr.)
Sales
Turnover
Net Profit Total Assets
Sun Pharma 756.80 182,136.49 8,017.20 -1,474.13 28,209.40
Lupin 1,733.80 78,089.76 9,752.47 2,397.35 9,067.83
Cipla 636.80 51,146.21 10,131.78 1,181.09 12,470.76
Dr Reddys Labs 2,995.30 51,102.11 10,010.94 1,679.35 13,758.80
Aurobindo Pharm 804.45 46,977.03 8,095.10 1,516.34 8,256.07
Cadila Health 393.80 40,314.98 5,284.43 1,271.12 5,788.60
Ranbaxy Labs 859.80 36,598.55 6,864.94 -879.00 7,088.06
Divis Labs 1,106.35 29,370.12 3,084.01 847.06 3,588.09
GlaxoSmithKline 3,250.45 27,532.29 3,287.58 471.65 1,854.30
Torrent Pharma 1,448.20 24,506.83 3,476.00 623.00 4,990.81
Glenmark 863.80 24,372.65 5,085.60 1,007.53 5,299.65
Wockhardt 1,602.10 17,703.27 1,886.55 331.82 2,207.99
Piramal Enter 917.65 15,835.25 2,401.41 372.74 15,250.15
Alembic Pharma 672.15 12,671.10 2,011.04 286.61 1,002.18
Abbott India 5,371.50 11,414.06 2,288.64 228.96 937.52
Ajanta Pharma 1,284.00 11,299.36 1,356.20 306.37 836.50
Strides Arcolab 1,376.70 11,102.11 929.42 532.32 1,801.32
Pfizer 2,415.60 11,050.82 1,853.31 69.82 1,975.52
Sanofi India 4,228.35 9,738.15 1,977.50 263.70 1,485.84
Ipca Labs 758.85 9,576.62 3,085.14 256.11 3,055.71
Biocon 473.25 9,465.00 2,241.60 361.22 2,651.90
Natco Pharma 527.75 9,192.05 715.57 152.92 1,143.83
Sun Pharma Adv 345.20 8,170.45 155.74 -39.52 103.48
Jubilant Life 427.05 6,802.10 3,176.30 205.11 4,024.49
FDC 227.15 4,039.48 877.65 145.91 930.47
Marksans Pharma 97.40 3,986.72 408.68 67.11 401.70
Shilpa 456.15 3,517.00 565.40 84.18 630.17
Suven Life Sci 250.45 3,187.79 520.86 108.75 649.01
Granules India 150.15 3,142.32 1,213.31 95.23 784.97
Wyeth 1,333.85 3,030.52 679.33 87.92 271.79
Indoco Remedies 317.45 2,925.31 853.64 82.81 604.27
Shasun Pharma 428.55 2,882.23 1,078.40 41.34 934.87
AstraZeneca 1,075.80 2,689.50 517.07 -20.84 150.75
Dishman Pharma 308.90 2,492.73 478.69 58.64 1,341.97
Unichem Labs 271.90 2,469.99 1,090.98 64.40 947.63
JB Chemicals 259.05 2,197.26 1,061.42 113.58 1,121.44
Fresenius Kabi 132.50 2,096.52 596.30 80.59 813.34
Caplin Labs 1,313.40 1,984.55 240.23 40.94 94.58
Morepen Lab 30.95 1,392.21 370.26 0.58 377.53
Hikal 166.50 1,368.64 871.86 40.52 965.93
Aarti Drugs 531.10 1,286.17 1,087.22 77.60 706.43
Merck 753.00 1,249.93 867.49 43.22 554.30
Nectar Life 55.25 1,239.04 1,643.64 66.26 1,818.79
Alembic 42.85 1,144.23 145.81 24.15 264.23
Panacea Biotec 139.20 852.61 679.20 -65.23 1,487.98
SMS Pharma 924.30 782.44 579.29 35.24 406.89
TTK Healthcare 947.95 736.18 482.93 16.16 156.56
Amrutanjan Heal 468.05 684.07 163.33 17.29 104.83
Vivimed Labs 393.75 638.02 431.58 18.94 967.89
Neuland Lab 688.85 611.92 464.70 15.78 338.84
Mangalam Drugs 399.30 574.12 220.66 6.14 100.55
RPG Life 284.25 470.04 242.27 1.00 157.94
Orchid Chemical 50.45 448.83 1,753.73 -191.04 3,579.99
Astec Life 228.50 444.55 253.46 14.78 221.71
Hester Bio 520.10 442.44 90.04 14.58 120.58
Gufic Bio 55.90 432.39 151.75 3.75 56.50
Themis Medicare 421.70 358.67 166.86 2.05 146.48
Sharon Bio Medi 27.65 328.86 833.95 -225.86 1,069.32
Kopran 76.35 313.79 325.59 15.48 211.62
Lyka Labs 114.50 252.36 90.48 1.37 162.44
Sterling Bio 7.25 197.23 670.63 -457.71 5,587.16
Piramal Phytoca 66.20 171.86 4.54 -3.46 8.27
Elder Pharma 83.00 170.46 483.47 17.18 1,330.24
Bal Pharma 116.60 150.09 187.13 4.02 102.38
Venus Remedies 125.45 143.54 451.88 4.55 750.21
Brooks Labs 81.70 132.24 85.21 9.47 111.93
Alpa Labs 62.75 132.03 57.39 -1.40 115.12
Ind-Swift Labs 31.85 130.47 667.99 -119.16 2,023.77
Parenteral Drug 41.70 124.33 176.59 -54.08 516.80
Wanbury 61.30 122.41 249.92 3.21 180.09
JagsonpalPharma 46.55 121.95 138.15 1.17 134.74
Nath Bio-Genes 73.80 118.11 185.33 25.36 128.07
Bafna Pharma 39.70 74.07 142.52 6.11 135.32
Dr Datson Labs 6.40 70.13 421.05 0.67 782.98
Kilitch Drugs 42.15 55.77 19.03 -0.19 119.95
Parabolic Drugs 9.00 55.70 233.02 -379.32 761.41
Ortin Labs 32.80 55.56 60.41 0.90 42.19
Celestial Bio 26.85 49.83 27.45 1.30 97.80
Country Condos 6.20 48.11 32.93 1.67 16.00
Arvind Remedies 6.65 45.30 911.11 58.90 853.34
Plethico Pharma 11.45 39.01 567.82 -8.73 802.59
Syncom Health 9.25 37.00 61.86 -3.82 191.26
Ind-Swift 5.60 28.19 417.17 -145.13 1,040.54
Panchsheel Org 29.00 14.54 35.80 1.89 24.72
Twilight Litaka 4.25 10.53 31.50 -139.58 147.78
Surya Pharma 0.15 3.04 12.64 -726.77 1,830.87

Saturday, 5 December 2015

Case Study: Panoramic Universal

Various dimensions of following a stock.

1. Stock and sector News.

2. Earnings news.

3. Management interviews.

4. Corporate announcements.

5. Quarterly results, yearly results, cash flow, ratios, balance sheet, PL statement.

6. Capital Structure. (extremely important)

7. Shareholding pattern and Promoter holding.

8. Peer comparison.

9. Momentum analysis.

Wednesday, 11 November 2015

Aban Offshore - Equity Dilution

Aban Offshore is an offshore driller that provides the following services: Exploratory services, Drilling services, Production of hydrocarbons, Manning and management.

Also into Wind Energy and produces 70MW annually.

Clients: Oil & Natural Gas Corporation Ltd. (ONGC),Hardy Exploration & Production (India) Inc., Shell Brunei, Shell Malaysia, Gujarat State Petroleum Corporation Ltd. (GSPC), Hindustan Oil Exploration Co. Ltd., Cairn Energy, Petronas Carigali, ROC Oil, Shell (South East Asia), Exxon Mobil Malaysia.

Aban Offshore's share price fell from 5500 (2008) to 209(2015). This post explores this price collapse and hypothesises about the causes of this steep fall.