Thank President Hosni Mubarak for helping you to buy your darling stocks at cheap or dirt cheap prices.

On Friday 28 January 2011, it just wasn’t the Sensex that fell by 288.46 points [ 1.54 per cent ] to close at 18395.97. The Dow too fell by 166.13 points [ 1.39 per cent ] to close at 11823.70 while the Nikkei fell by 118.32 points [ 1.13 % ] to close at 10360.34. Most importantly, Egypt’s benchmark EGX30 Index plunged 11 percent, the most since October 2008, to 5,646.50 at the 2:30 p.m. close in Cairo and trading was suspended thereafter. . Even, the Saudi Tadawul Index lost 430.58 points to close at 6,267.22 points. Yes FII’s were sellers but the epicenter of the crash was not India but Egypt, the land of the Pharaos.

FII inflow in the calendar year 2010 totaled Rs 133266 crore. FII outflow in January 2011 totaled Rs 4220.80 crore (till 27 January 2011) and this effectively represents just 3.16 per cent. Now tell me, my dear stock market ustads where is the flight of hot money happening. If you sell 3 to 5 per cent of your portfolio, will it mean that you are bidding good bye to the markets. Yes, if the FII’s sell off such sums every fortnight /month consistently then we need to be very concerned other wise not. And let us not forget that our stock markets were functioning before the FII’s entered India and will continue to exist much after “hot money” and the FII’s leave our country!

India's forex reserves rose to $299.39 billion as on January 21 from $297.41 billion as on January 14, the Reserve Bank of India said in a weekly report released Friday. OK, we may be far behind China, whose forex reserves surged 18.7 percent to a world-record $2.85 trillion at the end of 2010 from a year earlier. Yes, there are problems like inflation, widening deficit, oil price rise that will further propel cost-push inflation, unemployment and the ever increasing political scams [ 3 G may be the tip of the iceberg ] and that leaves the FII’s wondering whether our country is really prospering or deteriorating May be somebody has told the FII’s that all scam investigations have been kept under hold until the GOI approves and builds a 3 Star VIP jail with all amenities including swimming pool, Spa, Hot Tub / Jacuzzi et all.

Sometimes I feel all stock markets resemble a man /woman whose recuperative system works smoothly and fails smoothly too because of which all is not well at times and all is not well when the person is not well ! When a person falls sick an injection or two coupled with some medicines will make the sick man or woman hop with joy provided the recuperative system cooperates and if it does not, then all hell can break loose no matter how many injections you administer [ read QE1,QE2,QE3 …… QE? ] That’s precisely what’s happening in the stock markets. I am not an Economist but I wonder how China will react if for example, the US says something like : Hey, my Chinese friend, I hope you understand that we cannot import lots of stuff from you guys, post Lehman because we don’t like to work overtime printing the greenback [ by the way we have got lots of greenery across US – even in New York ] and we already have a huge Trade balance deficit with you guys. And yes, thanks for parking trillions of US $ in our Treasury bills – at least allow us to pay interest on the same! And let me check, how much gold we have in the vaults, lest we run out of the greenback [ read massive fall in US$ value ]

And now back to Cairo and the Suez Canal : An analyst for a shipping hedge fund explained that

the spike is connected to fears surrounding the continued operations of the Suez Canal, amidst social unrest caused by massive riots against President Hosni Mubarak’s 30 year rule. “While Suez closure is not much of a threat, shippers are refusing to load in the Red Sea and transit the Canal,” explained the trader. “What’s probably going to happen is that they re-rout ships to the Cape [of Good Hope],” he noted. “[Re-routing] makes voyages longer, which ties up ships and in turn diminishes supply,” said the analyst, “[this] is positive for the tanker market.” And mark my words – I won’t be shocked if Oil soon crosses US#110 per barrel!

Indeed the US may be recovering and that may be good for the global economy but let’s not forget what someone has said about Government statistics : “phony government statistics how long can it go on, paper wealth the government can inflate it, deflate it, conficiate it ,revalue it ,devalue it, print it,, sell and get out fast, the government controls the little bouncing ball.”

Conclusion : Those who are thinking of taking advantage of the sharp dips in the Sensex should defer their purchases by about a week as they may end up buying their favourite scrips that much cheaper. Don't be in a hurry to shop for shares.Expect the Sensex and Nifty to go down by 10 per cent plus this week. And thank President Hosni Mubarak for helping you to buy your darling stocks at cheap or dirt cheap prices.

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd

Sensex will kiss 1,00,000. Don’t be fooled by the bears - read this stuff and subscribe to HBJ Caps products right away

Rakesh Jhunjhunwala, the Warren Buffet of India is very confident of India growth story, so much so that he says though India is a globalising economy, here companies will grow multifold. “I am very much bullish in Indian companies and Indian stock bourses. Sensex is at 20,000 and we are expecting a 30% to 40% growth in the earnings. With this kind of earnings, the bull-run will continue. But in my view, Sensex will reach 25,000 and also 1,00,000. But I don’t know when,” he said. Besides don’t forget this : Mark Galasiewski, Asian-Pacific Fin Forecast at Elliott Wave International, sees Sensex at 100,000 within 15 years based on technicals and current patterns. You can read the details by brosing through this link : http://www.moneycontrol.com/news/fii-view/see-sensex-at-10000015-yrs-elliott-wave-intl_392738.html

Considering the ongoing fairly good results being posted by nationalized and private banks which are the backbone of our economy, I will not be shocked if Sensex kisses 35000 -40000 in 5 years time!

So, don’t be left behind – I’m not suggesting that if you have say Rs.10 lakhs surplus funds then you should invest all of this in stocks but you can safely deploy at least 30 per cent of it in the markets and that includes a paltry amount of Rs.5000/= buying HBJ Caps Bargain Stock Package.

The Bargain Stock Package offers the following:

[ Long term recommendation ]: 12 issues of “BARGAIN STOCK PICK" per year - Long term wealth creating Stock with potential return of 200-300% in 1-3 years holding period. A class of stocks that are widely overlooked by Street but can yield massive returns. These stocks will have limited downside.

[Short term recommendation]: 12 issues of “DEFINITE INCOME STOCK PICK" per year - Short term stocks with potential return of 25-50% in 1-3 months holding period. You can invest in these stocks for a descent regular income.

PLUS you’ll get all our earlier recommendations/research reports relating to the Bargain Stock Package absolutely free.

HBJ Capital’s Bargain Stock Package offers investors one of the finest and compelling value propositions ever to be encountered.

Should you have any doubts or clarifications in this matter, just shoot out a mail and I’ll be delighted to respond. Or contact: Mr. Sandeep Jain, COO & Head Strategy at 91 80 65681133/34, +91 98867 36791 for any information/clarifications.

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd

Do your own due diligence lest you end up buying a valueless stock

Many folks across continents love the markets and many hate the markets as if death is hacking them swiftly. I have often heard people saying such things like:

• The stock market drives me nuts.
• The stock market sucks and you bet it’s for suckers.
• The stock market is full of Harshad’s, Ketan’s and great swindlers
• The stock market is for those who love to lose their shirts
• The markets is only for the rich who get richer by the day by playing the volume game

I understand well the feelings and sentiments of those who hate the markets because they probably lost their hard earned money following tips and buying deadly stocks like Enron [ in US ] and say Soundcraft [ in India ] whose promoter Mr.Rajkumar Basantani shamelessly did insider trading rigging up the share price of Soundcraft and swindled the public. And yes theres a long long list of stocks which have simply vanished or delisted abruptly.

Rajkumar Basantani, had mobilised the money by offering high returns on fixed deposits. Most of the investors were from Mumbai and its vicinity. His companies – SoundCraft Industries and Kolar Biotech Ltd – were based in Mumbai. Investigators learnt that Basantani had deployed the funds in the stock market to increase the prices of the shares of his companies. They learnt that he had named drivers, peons and other sundry employees of his firm as directors of his companies. Subsequently both companies got delisted and Rajkumar went behind the bars. This is a good lesson for folks who are greedy for returns and go for Fixed Deposit schemes blindly – YOU SHOULD NEVER EVER INVEST IN FIXED DEPOSITS EXCEPT IN BLUE CHIP COMPANIES. YOU MAY GET 1 OR 2 PER CENT LESS BUT REST ASSURED YOU WILL RECEIVE BOTH INTEREST AND PRICIPAL AMOUNT WITHOUT ANY HITCH. Sorry for diverging from the main topic but I thought this may help me to alert folks who are sluggish in their investment matters.

Just as there are bad stories, there are a good number of good stories too. The following is a short true story told by a stock investor.

“About 12 years ago I invested in a stock of a micro cap company, Carnation Nutra-Analogue Foods Ltd. This company made a margarine product marketed as a healthy replacement for butter called Nutralite, and the 1 rupee face value share was trading between Rs. 1.10 and 1.30 after the company had declared a dividend of 60 paise. I bought at that time and post dividend my net cost was Rs. 0.70 for a share of par value of Re. 1. It was a thinly traded stock but its financials looked good and the buzz was that some larger company might buy it up and promote the essentially single product company.

Single product tiny companies either sink or swim fairly fast, so when the stock hit Rs. 13 in a few months, I sold out my holdings for a net gain of 18 times my investment. I could have sold out only enough stock to recover my original investment cost, but I was not comfortable holding a small unknown company's stock for the longer term. There were 2 other considerations--A thinly traded stock is by nature volatile and I did not believe that the financials at that time supported the increasingly exaggerated valuations. Second, it seemed that some message boarders on Moneycontrol.com were bidding up the stock among the boarders to possibly benefit themselves.

In 2006 Cadilla Healthcare bought a controlling interest in Nutra-Analogue Foods. In 2008 the company name changed to Zydus Wellness when it's stock was was trading at around 150, and today, 2 years later, it is trading at Rs. 600 and at a mind boggling price/earnings

(PE) ratio of 50. It still sells Nutralite very successfully along with other health products--SugarFree, a sweetner, and EverYuth skin care products. The stock that cost 70 paise 12 years ago has increased in value by over 850 times. “

Did I read over 850 per cent returns over a 12 year period. Wow, that’s not too bad and where do you get such returns. Not anywhere except in the Stock Markets provided you seek recommendations not from TIPSTERS but rather from professional Equity Research boutiques like HBJ Capital who will never recommend scrips like Soundcraft, Kolar Biotech.

Conclusion : There will always be good companies and bad companies but you need to exercise abundant caution and do your own due diligence before you take a call on any scrip - else seek the advise of experts who are extremely professional and ethical in their dealings.

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd

Walchandnagar Industries Limited

Walchandnagar Industries Limited is engaged in heavy engineering, which includes engineering, fabrication and manufacturing of machinery for sugar plants, cement plants and boilers, heavy duty gears, mineral processing, defence and nuclear power business; foundry and machine shop-manufacturing of cast iron (CI) and spheroidal graphite iron (SGI) castings required by various industries and machining of components, and other non-reportable segment, includes units manufacturing pressure and temperature gauges and Infotech Services.

Total Revenues in FY10 were Rs.692 crores and PAT of Rs.22.2 crores. During Q2FY11 total revenues were Rs.320 crores and PAT of Rs.10.1 crores. One should not be surprised if the company churns revenues in excess of Rs.750 crores in FY11. EBIT Margings range between 4.5 to 9 per cent and PAT margings are around 3 to 5 per cent – too bad for a company that’s doing business for decades.

At CMP of Rs.149.60/share, the company has a Marketcap of Rs.569 crores and its PE is 25.5. Despite a poor show this the DII’s own 6.6 per cent stake in the company.

But if we consider the following ongoing and future business plans, it appears the company may do well.

Walchandnagar Industries Ltd announced that the Company proposes to enter into a joint venture arrangement with DCNS, France for manufacturing of mechanical components for the submarine and other naval applications. A Memorandum of Understanding to this effect has been signed and the details of the intended joint venture are being worked out.

Walchandnagar Industries Ltd. will spend more than INR3 billion ($67.4 million) to build a heavy engineering plant in Gujarat. The Company has acquired 57 acres of waterfront land at Dahej, near Bharuch in Gujarat to build a green field manufacturing facility, especially for hydrocarbons and nuclear power segment. The plant is expected to be operational within three years.

Walchandnagar Industries Ltd. recently entered Into a Collaboration Agreement with Kawasaki Heavy Industries, Ltd. (Kawasaki of Japan for the sale and manufacture of Flow Dynamic Conveyor (FDC) in India. FDC is a technically advanced Product, used for conveying bulk materials in environmentally protected areas, as well as, earning carbon credits. The Product will suit the present / future Indian environment laws. The said agreement has become effective on October 28, 2010. Walchandnagar Industries Ltd. and Kawasaki believe that this Collaboration will open up strong opportunities for both companies in India in the field of Mining and Bulk Materials Handling.

Though one cannot predict the future of a company based on past track record, it is difficult to tell whether the stock will reach its 52 week peak of Rs. 292.90 again.

Conclusion : The business model of the company may seem to be good but I am not happy with the numbers and guess present/potential shareholders may not be elated either!

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd

Deep Industries Limited

Deep Industries Limited (DIL) based in Gujarat is a diversified oil and gas company with business interests in air and gas compression, work over and drilling, marginal field natural gas projects, coal bed methane projects, and oil and gas exploration projects. DIL is gas compression services provider. DIL is providing value added engineering services to various entrepreneurs of public and private undertakings. Deep Energy LLC, USA, Deep Natural Resources Limited and Prabha Energy Private Limited are the subsidiaries of the Company.

Four years top line and bottom line CARG stood at 61.93 and 29.36 per cent respectively. During FY 2009-10, the total revenues stood at Rs.1182 crores and PAT was Rs.280.44 crores. During Q2FY11, the company generated revenues of Rs.311.25 crores and PAT of Rs.81.35 crores.[ previous fiscals Q2FY10 corresponding figures were Rs.272.39 crores and Rs.87.34 crores. ]

The company has an Equity base of Rs.21.25 crores. Its EBITDA Margins are in the range of 55 per cent and its Net Profit margins are pretty good and hover around 22 to 25 per cent. The company enjoys a Return on Capital Employed of around 17 per cent and Return on Equity of around 16 per cent. Promotors stake in the company stands at .50.05 percent, FII’s own 2.34 and DII’s s own 10.63 per cent.

Deep Industries recently received a hiring services contract worth 115 milllion rupees for a period of five years at a property run by Oil & Natural Gas Ltd. DIL has been awarded two coal bed Methane (CBM) blocks by GOI in CBM III rounds.

CMP of the company’s share is Rs. 77.25 and as such is available close to its 52 week low of Rs.75.05. The 52 week high was Rs.122. Since the markets are very turbulent it is possible for the share price of Deep to slide below its 52 week low in which case the shares may become available at PE of around 10, current PE being around 13.

Deep Industries having a Market Capitalization of Rs. 164 crores, is a safe bet in the Oil and Gas space considering good profit margins and a Debt Equity ratio of less than one. Obtaining 50-100 per cent returns from this scrip in about 1 to 2 years time cannot be ruled out.

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd

Day Trading is one great option to make money in these frightening and uncertain times

Although completely unknown, not only to the public, but to most of the financial community as well, Ed Seykota's achievements must certainly rank him as one of the best traders of our time. In the early 1970s, Seykota was hired by a major brokerage firm. He conceived and developed the first commercial computerized trading system for client's money in the futures markets. His system proved quite profitable, but interference and second-guessing by management significantly impeded its performance. This experience provided the catalyst for Seykota going out on his own.

In the ensuing years, Seykota applied his systematized approach to trading a handful of accounts and his own money. During that period, the accounts Seykota managed have witnessed an absolutely astounding rate of return. For example, as of mid-1988, one of his customer's accounts, which started with $5,000 in 1972, was up over 250,000 percent on a cash-to-cash basis. WOW!

Some of Ed’s thoughts and opinions about the markets is provided below:

Simplicity in trading demonstrates wisdom. Complexity is the sign of inexperience. Do not think you are smarter than the market, you are not.

The stock market can not be predicted, we can only play the probabilities. The easiest time to make money is when there is a trend. Ed strongly believed in following aspects that characterize his thinking as a trader:

§ Kill your greed

§ Never chase stocks

§ Don’t compare yourself to others

§ Always use stop loss

§ Standing aside is a position

§ Never add to a losing position

§ Stay calm and focused

§ Don’t believe the hype

§ Cultivate independent thinking

§ Be ready for worst case position

§ Nosce te ipsum - Know thyself

As Ed Seykota says whatever be the tool technical or fundamental he who visualizes victory and is in control of himself will win.

Further Ed Seykota admits that "I feel my success comes from my love of the market. I am not a casual trader. It is my life. I have a passion for trading. It is not merely a hobby or even a career choice for me. There is no question that this is what I am supposed to do with my Life"

Ed Seykota through his trading tribe encourages everyone to "Experience the Experiences". This way we all would be able to reflect on ourselves better and we would be able to approach anyone or anything in a much easier way and a better way.

Remember : He who visualizes victory and is in control of himself will win. So go long or go short as per the trend and forget what Helicopter Ben is doing, forget Euro crisis, Korea, China, forget Gold prices, forget Black Gold, forget Dabaang and just go for the stocks that you think will make money for you virually everyday like - like the cool bucks you would have made yesterday by going short on Reliance Infra and going long on TCS today. Everyday, there are great ways to make money provided you pick the right stock and are pretty confident about the right direction that you believe the stock is heading towards.

If you have any questions on how to make money virtually on a daily basis, please shoot out a mail to me or call Mr.Sandeep Jain on 09886736791.

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd

Philips Carbon Black - buy on dips and embrace a safe stock in these turbulent times

Phillips Carbon Black Limited,[ PCB ] part of the RPG Group, pioneered the carbon black industry in India. It is now the leading producer of carbon black in the country.

Initially, the company had a technical tie up with Phillips Petroleum company, USA which ended in 1978. Subsequently, in 1988, PCBL entered into a technical agreement with Columbian Chemicals Company, USA, and acquired access to the modern state-of-the-art Carbon Black technology. This resulted in the company gaining flexibility, product range, production capacity and energy conservation. The company is not only the largest exporter of Carbon Black from India but also one of the largest in Asia in its field. Phillips Carbon Black (PCB), a leading manufacturer of carbon black, is well poised to ride the boom in the domestic tyre industry

Carbon Black is also used across wide industrial segments and finds application in:

• Colouring agent for ink and paints
• Resin and film colouring agents
• Electric Conductive Agent
• Electronic equipment related materials

And don’t forget that so long as Xerox machines are used extensively in public and private offices and by CBI, Auditors and various Interrogation Departments [ thanks to the ongoing continuity of scams on our soil as well as across continents ] the demand for carbon black can only rise and hardly fall – after all carbon black is also used as black pigment for inkjet ink or toners. And don’t forget that our babus love to take out photocopies of voluminous documents and sometimes photocopies of photocopies, in case the first set of photocopy gets lost!. Add, then there is always the endless demand for taking cost free personal photocopies and the orders for toners just shoots up in geometric proportions. Wow, that sounds too good for existing and prospective shareholders of Philips Carbon Black.

For fiscal FY10, topline was Rs.1344 crores and PAT was Rs.122 crores. [ previous fiscal FY09 Rs.1200 crores and loss of Rs.64 crores ] During IHFY11, the total revenues were Rs.911 crores and PAT was Rs.52 crores. I guess the company will cross Rs.1500 crore mark of turnover in FY11.

The company having a Marketcap of just Rs.477 crores is available at a very attractive PE 3.89. The Price/Book Value is just 1 at CMP of Rs.143. Moreover the Dividend Yield is 3.48, Face Value being Rs.10. The 52 week range is Rs.242.45 / 148. The company’s Return on Capital Employed and Return of Equity in FY10 stood at 22 and 45 respectively. The Debt Equity Ratio is 1.81 which is backed by Interest Cover of 4.07. The Gross Asset base has increased by Rs.387 crores in FY10 over FY 09. PCB is expanding its capacity to 410,000 tons in FY11 from 360,000 tons currently (up from 270,000 tons in FY09). Additionally it is foraying into Vietnam market by setting up a plant with a capacity of 65,000 tons. Power segment to be the mone

Thus the company not only enjoys economies of scale but it is well poised to capture the huge export potential due to shutting down of plants in the USA, Europe and Japan due to environmental issues.

The downside risk is low but upside potential is pretty good. Promotors have a 45.83 per cent and Institutional Holding is 26.32 per cent. Due to complex national and international complications, the markets are likely to slide further in which case PCB may become available at less than its 52 week low. Go for it and hold it for 1-2 years in order to get good returns from this scrip.

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd

“Value Pick” recommendation (80-100% return) will be announced on 17th Jan'11 for all our paid subscribers of PSP !!

Dear Readers,

The final round of stock selection for “Value Pick” recommendation for the month of Jan'11 is over. The name of the stock selected will be announced on 17th Jan'11 to all our Paid Subscribers of "Penny Stock Package" around 9pm IST thru e-mail & sms alert.

Make use of the market correction to buy this "Value Pick" recommendation because the stock is available extremely cheap. Just to let out a very small information on this month's "Value Pick" recommendation is that TATA MOTORS is the Promoter of the company and they have been expanding the production facilities of the company rapidly in order to serve the huge number of orders coming their way (Note: We are not talking about ARTSON Engineering, as many may presume).

Know more about “Value Pick” Report – They are Short/medium term wealth creating stocks that can more than double your investment amount in 6 months. They are a class of stocks that are widely overlooked by Street but can yield massive returns. One needs to hold these stocks for minimum period of 6 months to get great returns.

Some of our Previous Value Pick Recommendations

• Venky's India (can be downloaded HERE) - 6.5 bagger in 12 months
• Parekh Aluminex (can be downloaded HERE) - 5 bagger in 11 months
• Manjushree Technopack (can be downloaded HERE) - 3.5 bagger in 9 months
• Maithan Alloys Ltd (can be downloaded HERE) - 100% return in 7 months

Note:

• All the Non-subscribers who wish to avail the report can subscribe for "Penny Stock Package (PSP)".
• For complete details on Penny Stocks Package (PSP), visit - LINK

If you have any queries regarding our two offerings PSP and MMP drop a mail at info@hbjcapital.com/ info@multibaggerpennystocks.com or call us at

• 09818866676 (24X7) or
  
• 080 65681134 (Mon-Sat 10 AM to 10 PM)
• or sms "HBJ MPS" to 56161
  

We will get back to you and help you chose the best option based on your profile and requirements.


For Verisign Secured Payment Gateway, visit - LINK

For other payment mode/options – LINK {You can make the payment & send an email to Info@hbjcapital.com with payment & package/offer details or Call 09886736791}


Happy Investing,

Team MPS

Team IVI wishes you all a Happy Pongal and Makara Sankranthi.

On this auspicious occasion make a vow to make good money from the stock markets by opting for our Bargain Stock Package available for just Rs.5000 per year.

The package offers the following:

[ Long term recommendation ]: 12 issues of “BARGAIN STOCK PICK" per year - Long term wealth creating Stock with potential return of 200-300% in 1-3 years holding period. A class of stocks that are widely overlooked by Street but can yield massive returns. These stocks will have limited downside.

[Short term recommendation]: 12 issues of “DEFINITE INCOME STOCK PICK" per year - Short term stocks with potential return of 25-50% in 1-3 months holding period. You can invest in these stocks for a descent regular income.

PLUS you’ll get all our earlier recommendations/research reports relating to the Bargain Stock Package absolutely free.

HBJ Capital’s Bargain Stock Package offers investors one of the finest and compelling value propositions ever to be encountered.

Should you have any doubts or clarifications in this matter, just shoot out a mail and I’ll be delighted to respond. Or contact: Mr. Sandeep Jain, COO & Head Strategy at 91 80 65681133/34, +91 98867 36791 for any information/clarifications.

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd

Trade like a Tiger - after all Value means Money and Money means Value

As a value investor, you can find value in stocks that are sitting out there and yelling to you in the following manner:

• some stocks yell – hey, don’t you see value in me as I continue to rise – buy me and you’ll make money
• 
  
• some shout – hey, can’t you see value in me as I continue to slide, so sell me fast and you’ll make money

I came across a simple and vivid confession of a trader who says:

“However, given today’s uncertain times, you need to trade like a tiger hunts - patiently waiting for the best opportunity and not expending undue energy and capital in lower probability trades. As to holding positions overnight, I cannot imagine a less opportune time to extend your timeframe and hold trades beyond the day. It seems that today’s rallies and sell-offs are randomly distributed, making trades held overnight little more than coin-flips. I learned early in my trading career that my sleeping and my trading account improved once I vowed never hold a position overnight. If we are resolved to patiently wait for the best setups and exit our positions prior to each day’s close, what else should we do? “

Today we got to see a pretty turbulent and violent market that was more mysterious than a mysterious woman could be – absolutely unpredictable – it was up one minute and went down hill swiftly the next minute only to rise swiftly before you could make sense of what was actually happening.

Today, the one who traded like a tiger on say SBI could have made good money if he got in and got out at the approximately right turns – going long and short as per price action – easier said than done. Needless to mention the one who went short on SBI during post lunch session emerged the true winner. SBI rested at Rs.2500.80, down by Rs.59.90. And those who went short on Axis Bank and HDFC too emerged as winners.

Remember : the markets are providing great opportunities to every investor to make money buying/selling or selling/buying stocks virtually everyday. But you need to have the guts of a tiger to jump on your prey [ read stock ] at the opportune time and make a killing. And after you’ve made a killing you need to go into hibernation like a tiger who does not over eat – it attacks only when hungry, meaning we should not be very greedy. Trading in just one or two good stocks per day can help you make good money. But your entry and exit points should be better than the smartest guys on the street and your stop loss should not be too narrow nor should it be too wide. Again, easier said than done.

In these turbulent and shockingly uncertain times, Value to me means Money and Money means Value.

Think again and trade like a tiger – day trade or swing trade but do it like a tiger and sleep well like the King of the Jungle after making a good killing off and on.

Happy Investing!

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd

Why stay away from a low priced scrip despite the Fat Boys having bought it

Well friends, the Fat Boys [ for the purpose of this article let’s restrict fat boys to mean FII’s ] invested Rs. 130308.30 crores in calendar year 2010, In dollar terms, the net equity inflow in 2010 stands at $28.70 billion, above last year's $17.45 billion. This annual inflow is at record level. And obviously this money was injected into various stocks. It is very rare for FII’s to invest in stocks which have low Marketcap since their appetite is extremely voracious. . In fact, they have the wherewithal to swallow hundreds of small cap stocks and chew them dry for breakfast!

Anyway, lets look at one such small cap stock in which the FII’s have a 12.97 per cent. The name of the company is Ruchi Infrastructure Limited. Well. owning a 12.97 per cent in a company having a Marketcap of just Rs.456 crores is pretty risky. The Promotors own 52.29 per cent stake in the company. Risky in the sense that if the company does not do well who is going to buy such shares – will you ? Obviously not.

Ruchi Infrastructure Limited is primarily engaged in the businesses of storage and transportation of edible oils, petroleum, liquid bulk chemicals, agricultural products etc., in refining of edible oils and manufacturing of vanaspati. Ruchi Infrastructure Limited is having storage terminals at major ports ( Jamnagar, Haldia, Mangalore, Chennai, Cochin, Karwar etc) and at railway side terminals (Kanpur, Doraha, Jaipur, Hyderabad & Cuttack).

The 5 year topline CARG till FY10 grew at 18.28 percent whereas the bottom line CARG grew at 8.79 per cent. During Q2FY10, total Sales and PAT stood at Rs.317 crs and Rs.1.49 crores as compared to Q2FY09 Sales of Rs.315 crores and PAT of Rs.8.06 crores. Thus, bottom line of the company is down by a whopping 81.5 per cent! In FY10, the total revenues and PAT stood at Rs. 1467 crores and Rs.32 crores respectively. [ Previous FY09 figures were Rs.1173 crores and loss of Rs.11.94 crores ]

The shares of the company are trading at a PE of 17.8 and Price/BV of 2.7 considering CMP of Rs.22.25/share. [ FV Rs.1 ] The 52 week range was Rs.67/20. Though working capital management appears to be good, the company’s PAT margins are very poor and hover around 2.3 to 3.6 per cent. Besides the company’s Debt Equity ratio is 1.76.

I will not be shocked if the share price goes sliding downhill to rest in the range of Rs.15-20. So those who are clinging on to Ruchi Infrastructure need to be careful.

Perhaps if the Q3FY11 results are good then there could be some improvement in the share price and that too if the overall market turns really bullish. Else God bless the FII’s and owners of Ruchi Infrastructure.

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd

Murli Industries – appears cheap but is risky

Murli Industries Limited based in Nagpur company was initially functioning as Murli Agro Products which was rechristened as Murli Industries Limited in 1991. The company operates 5 divisions as under :

CEMENT

The company has one operating plant at Chandrapur(MS) with cement Production capacity of 8300 MTPD. Murli is planning to set up additional 3 plants as unde

• Rajasthan - 10,000 TPD
• Gujarat - 10,000 TPD
• Karnataka - 10,000 TPD

PAPER

In this segment, the company manufactures Duplex Boards which are sold to leading FMCG, harmaceuticals, Textile industries etc.

SOLVENT

Under this segment , the company manufactures Soya Refined Oil, Soya De-oil cake and Soya Acid Oil.

POWER

The company believes in self –reliance and hence set up a 16 MW Power Plant for its Paper UUnit and has also installed 3 x 16.5 MW Power Plant for its Naranda cement unit.

PULP

Murli has a paper unit with a capacity to manufacture paper to the tune of 150 MT per day.

The Promotors holding is 54.59 per cent. Institutional holding is just 0.74 per cent.

The company generated total Revenues of Rs.571 crores and PAT of Rs.37.6 crores in FY10. In Q2FY11 the company generated revenues of Rs. 132 crores and PAT of just Rs.2.73 crores as compared to Q2FY10 topline of Rs.68 and bottom line of Rs.10 crores respectively.

A low PAT Margings hovering around 8 per cent coupled with a high Debt Equity ratio of 3.69 and Interest Cover of 2.08. Further, its Inventory holding period has shot up from 175 days in FY09 to 204 The 52 week range was Rs.118.90/48.50. The stock is currently quoting at Rs.49.60 that’s close to its 52 week low.

The company has a Marketcap of just Rs.266.4 crores and is available at a PE of just 7.54. So though the valuations appear to be cheap backed by a diversified product range, considering the high Debt Equity ratio and low profit margins, it’s a bit too risky to take a call on this scrip despite a decent Dividend Yield of 4.03.

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd