INTELLECTUAL TRADING

BREXIT camp wins; UK becomes first country to leave EU BREXIT, which was looking quite eminent has finally taken place. As at 10.15 am (IST) it only required 3.7 lacs to win. With less than an hour left for the outcome, things are very clear, British leaves the European Union. The leave camp has got 51.8 per cent vote. UK has become the first country to leave the European Union. BREXIT, was  a political goal that has been pursued by various individuals, advocacy groups, and political parties since the United Kingdom (UK) joined the precursor of the European Union (EU) in 1973. Withdrawal from the European Union is a right of EU member states under Article 50 of the Treaty on European Union. Article 50 of the Treaty on European Union provides that: "Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements." Article 50 was inserted by the Lisbon Treaty in 2007, before which the treaties were silent on the possibility

The stocks which could witness a significant movement on June 24 are Advanta Limited; Omax Auto Limited; Aditya Birla Fashion and Retail Limited; Tata Motors Limited /Tata Steel Limited; Coal India Limited. a) Advanta: Advanta, the R&D company for hybrid seeds has informed BSE that the Gujarat High Court has approved its amalgamation with UPL Limited, the manufacturer of crop protection chemicals. Advanta is the transferor, while UPL is transferee. b) Omax Auto: Omax Auto, the maker of auto and non-auto components has bagged an order for supply of railway parts from Indian Railways worth Rs 90-100 crores. The stock is likely to trade in green in the coming session. c) Aditya Birla Fashion and Retail (ABFRL): ABFRL, known for its Pantaloons brand signs exclusive deal with British brand Izabel London to grow its international presence. Both the companies specialise in women’s wear. d) Tata Motors/Tata Steel: Both the companies will be reactive of the Brexit result to be rel

High dividend payouts are reliable only if they are accompanied by high or stable returns on equity     A high dividend payout (dividend as per cent  of net profits) is generally seen as an  attribute of a mature company. It means that  the company retains less for its growth and pays out  most of its earnings. A high payout in a single year could be frequently seen but only established and  mature companies can sustain it on a long-term  basis. Established companies don’t need much  capital expenditure for future growth and hence  prefer to distribute high dividends to their  investors. If you are thinking of investing in some  company due to its high dividend payout, you must,  however, see not just the payout but also historical return on equity.           A high dividend payout keeps the return on  equity relatively high if margins remain intact.  This is simple mathematics. When a major part of income is distributed as dividend, less profits are  retained. Retaining less pr

If you want to survive in a bureaucracy, any bureaucracy, it is important that you market your bosses well.  It is important that you say things that your bosses like.  It is important that you repeat things that your bosses have been saying and like to believe in.  It is important that you laugh at the jokes that your bosses crack-even the ones you do not understand.  It is important that you do not have an opinion of your own. And if you do, it is better if you keep your mouth shut.  Because if you don't, chances are that you might be asked to leave very soon.  That is one of the unwritten rules of India's democracy.  The Congress excelled at it for close to the six decades that it governed the country. And the Bhartiya Janata Party has just continued where the Congress left.  Raghuram Rajan, the twenty-third governor of the Reserve Bank of India (RBI), probably did not understand this.  As a consequence, he won't be getting a second term. This will be

Nifty weekly performance (June 13, 2016 – June 17, 2016)  Indian indices witnessed volatility and booked marginal losses on the back of global economic concerns. For the entire week, the BSE Sensex was down 0.04%, while the NSE Nifty was unchanged.The index traded on an extremely volatile note throughout the week. It opened with a gap down on Monday and recovered most of the losses by Wednesday and finally ended the week with nominal losses. The index is currently trading in a very small range of 150 points from 8,050 to 8,200. One expect range bound action with high volatility in this eventful week. Nifty Prediction for Week (June 20, 2016 – June 25, 2016): Support for the index lies in the zone of 8000 from where the index has broken out from the triple top formation. If the index manages to close below these levels then the index can drift to the levels of 7800 where 200 Daily SMA is lying. Resistance for the index lies in the zone of 8280 to 8340 where the index has cr

Chapter two of the renowned investment book, Quantitative Value, is dedicated to Joel Greenblatt's very simple approach to investing - The Magic Formula. The chapter begins with a quote from Buffett about why it makes sense to stay away from the geeks bearing formulas with esoteric terms such as 'beta', 'gamma', and 'sigma'. Instead, the author of the book prefers the quantitative translation of Buffett's infamous quote 'It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price'. A wonderful business earns strong return on capital. This is a better metric than the absolute figure of profits or revenues, or for that matter, growth rates. Sure, these are important, but their importance wanes if a company is not able to earn returns above its cost of capital. Greenblatt has defined return on capital as: ROC = EBIT / net property, plant, and equipment + non-cash net working                    capi

I am sure you've heard that 'the trend is your friend' or that you should 'trade with the trend' many times from technical analysts and traders. That's because it's good advice. Most money is made when markets are trending. And to benefit from the trend, you have to trade in its direction.  But that's only one side of the coin. Markets do not trend all the time. They move up and down quickly, and a large part of the time is spent sideways, consolidating the gains or losses. There are times when the markets or stocks simply do nothing and trade choppily in a very tight range, giving no indication at all of the trend.  Hence it is said that whenever you spot a trend you should befriend it and trade with it. The catch is trends do not last forever. The trend is your friend only until the end.  And that's when you have to step aside from the herd. If you don't, you'll be butchered in the slaughterhouse. This is where most of the people ge

SMA: A simple, or arithmetic, moving average that is calculated by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods. EMA: A type of moving average that is similar to a simple moving average, except that more weight is given to the latest data. The first step is to understand what is 315, its advatages and disadvantages. The second step is to understand some rules I have derived to use it effectively. Rules are related to effective entries, effective SL management, effective profit bookings, effective re-entries and in the end effective money management or effective safeguarding the capital. In this post I would focus on step 1 i.e what is 315 etc. 315 Strategy for swing trading 315 is a simple swing technique which tries to identify a trend very early. In this strategy we use only EMAs name EMA 3 & EMA 15 (hence the name 315). People ask me why EMA 3 and EMA 15 . For me

                      A pyramid representing 3 habits for successful investing      Investment Discipline . Think about it – there must be a reason why the most successful guys in stock markets are referred to as – investors and not by any other term. Investment requires a regular stream of income. If you are looking to quickly multiply your corpus by doing some quick trades in stocks, your best bet would be some form of technical/ momentum kind of trade. A few have succeeded at that; so its very possible, albeit risky. Research is something you may be able to outsource, though it helps to be aware of what’s going on all around you. In any event, it is easy to understand basic numbers. In short, this is not where many people falter. PATIENCE :  There is a reason why Patience occupies a position right over the top of the pyramid It is the most important of all habits for successful investing. While your portfolio may be built on traits of sound research and military d

What is Sovereign Gold Bond (SGB)? Who is the issuer?            SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.           Pursuant to RBI press release ref no: 2015-2016/2857 dated June 08, 2016, the first tranche of Sovereign Gold Bond issued on November 30, 2015 held in dematerialised form will be available for trade on NSE trading platform w.e.f. June 13, 2016. Sovereign Gold Bond will trade in Capital Market Segment. Market timing for trading will be 09:15 am to 3.30 pm & 3:40 pm to 4:00 pm (closing session). For further details refer circular download ref no. :  NSE/CMTR/32540 Know more about Sovereign Gold Bonds Scheme -   SGBs are Government securities denominated in grams of gold (1 unit = 1 gram) -   Issued by the Reserve Bank o

When share prices rise, everyone wants to know what share to buy. Investors are keen to be a part of the wealth creation process. Stock markets are engines of economic growth for a country. A vibrant stock market is essnetial for a country like India. There are multiple ways an investor could participate.   HOW ARE STOCKS CLASSIFIED Stocks can be classified into multiple categories on various parameters – size of the company, dividend payment, industry, risk, volatility, as well as fundamentals. ·           Stocks on the basis of ownership rules: This is the most basic parameter for classifying stocks. In this case, the issuing company decides whether it will issue common, preferred or hybrid stocks ·          Preferred & common stocks: The key difference between common and preferred stocks is in the promised dividend payments. Preferred stocks promise investors that a fixed amount will be paid as dividends every year. A common stock does not come with this prom