Normalcy returns

After a twisty and turny September, all of the trading community was looking forward to a more helpful October.

What a month it turned out to be!!!!
A 600 point move is all any good trader wants, and @www.jerrytechnicals.com we love such big moves.


Proof? Check our performance at http://www.jerrytechnicals.com/performance.html


Premium service at affordable rates. Thatz what you call value and you will only get value at jerrytechnicals. 

Power Grid FPO - A closer look

POWERGRID (532898) FPO - Structural Analysis


          To partly meet its capital expenditure plans, Power Grid has come out with a follow-on public offer (FPO) at a price band of Rs 85-90 per share. 


The offer, will help raise Rs 7,575 crore based on the upper price band, and includes an offer for sale worth Rs 3,787 crore by the government.


The issue opened on 9th Nov and lasts till 12th Nov.


The price band is set at 85-90 rs. Retail Investors will get a 5% discount on the issue price.


How good is it ? - The fundamentals


                Power Grid is a giant company in the field of power transmission in india.


It is so big that it is even the 3rd largest power transmission utility company in the whole world.


Powergrid currently trades at 3 times book value and 17 times PE.


Power grid is expected to report 20 percent growth in revenue in the next 3 years. 


This means that the Book Value of the stock could move up to 53 - 56 level in next 3 years.




How good is it ? - The technicals

MACD is below zero line and moving up. RSI is neither overbought nor oversold. 


95 is srong support for the stock. Weekly close below this will take the stock down to 80 levels.


On the upper end 110 - 115 is huge resistance. The stock needs a weekly close above 120 for decent run upwards.






Conclusion


The Qualified institution part of the issue is already subscribed 2 times. 


So can we expect another coal india ? 


Well it depends on the kind of returns one is expecting.


If a retail investor applies for 1000 shares at cutoff price of 90 rs which is the higher end of spectrum,


he will probably get 700 shares allocated. 


Considering th 5% discount, the retail investor will be issued stocks at 85.50 rs per share. 


So one can safely expect a listing gain of 5 - 15%. 


At the higher end of spectrum of price movement, if the stock moves to 110, the investor 


can pocket a gain of 28.6%.


However, one must note that this an FPO unlike Coal India (IPO). Stock has been around for some time.


It is very low beta stock and so taking the gains out, might take time. 




A very good fundamental stock with very low beta -- not good for traders, good for long term investors is our conclusion.






NEXT: Nifty Outlook

Disclaimer : This is not a recommendation/ solicitation of any order to buy or sell, but Jerry's view on indian stock market. I assume no responsibility for any opinion or statement made in this blog. Readers are urged to exercise their own judgment in trading. Readers shall solely be responsible for profit/loss

Nifty Trading Plan 14-October-2010

NIFTY FUTURE OUTLOOK


            What a move by bulls. 


On huge FII buying yesterday nifty and sensex went through the roof.


Nifty exactly moved up from pivot level mentioned in yesterday's article.


For today's trading nifty future pivot has moved to 6249.


Resistance is at 6288 and above 6304 nifty will rocket to 6340 and 6380.


Reversal from resistance will take nifty to 6249 and 6210.


For nifty to be in negative zone, it must break and trade below 6194. 


Doing so nifty will correct to 6140 and 6120.




NEXT: NIFTY FUTURE SOARS FROM PIVOT

SPECIAL: Coverage of IDFC infrastructure bonds


Disclaimer : This is not a recommendation/ solicitation of any order to buy or sell, but Jerry's view on indian stock market. I assume no responsibility for any opinion or statement made in this blog. Readers are urged to exercise their own judgment in trading. Readers shall solely be responsible for profit/loss

IDFC Infrastructure Bond - Should we be buying it ?

IDFC INFRASTRUCTURE BONDS


                         Have a look at any paper, one will be bombarded with ads for IDFC infra bonds.


The brokers are  hiring temporary helps to cold call customers and getting them to invest.


And I was no exception. I also got enticed. So I decided to do a study on what is the deal about 


IDFC infra bonds. Here are my findings.




What is the noise all about?
    
       It all started with the budget in which FM announced extra tax rebate for infra bonds which is in addition to the existing 1L limit. And that is the only advantage of this whole thing. 


I will explain why. 


IDFC infrastructure bonds come in 4 series. (More on that later).


The interest rate on these bonds are either 7.5 or 8%. Now if I subtract tax from it,
returns become paltry 5.5 to 6%. Not so good now right?


However, if you add the tax benefit returns become 9 - 9.5%. This is much better isn't it.


So we have established, that this infra bond thing is useful only for tax saving. 


Ok now to the technical stuff.


Minimum investment a person has to make is 10,000 rs. 
One can invest more than 20,000 , but he/she will receive tax break only for 20,000.


How can one invest in IDFC infrastructure bond


One needs to have a demat account for investing in this bond, as these bonds will be listed 


on  both NSE and BSE.


Lock-in Period - When will I get money back


Lock-in period for these bonds are 5 years and maturity period is 10 years. 


What does this mean? You cannot get this money back till the end of 5th year.


After 5 years, you can hold it till 10 years when IDFC will give your original money + interest earned. 


Another option is, since these bonds are listed on the stock exchanges, one can sell it off in the 


market just like any other stock after 5 years. 


What is this 4 series ?


IDFC has introduced bonds in 4 flavours. Series 1, Series 2, Series 3, Series 4.


Essentially they differ in type of interest and buyback.


Series 2 and 4 pay cumulative interest. 


Series 3 and 4 offer buyback. Buy back means, you can sell the bonds to IDFC at the end of 5 


years. If one doesn't take this option, he will have to sell it in NSE or BSE as explained above.




What is the conclusion


 1) Don't bother about this unless are in 30% income tax bracket.


2) Invest only maximum of 20,000.


3) I will only go for series 4 (cumulative + buy back + interest rate of 7.5%) since my objective is 


only to get tax break.








Disclaimer : This is not a recommendation/ solicitation of any order to buy or sell, but Jerry's view on indian stock market. I assume no responsibility for any opinion or statement made in this blog. Readers are urged to exercise their own judgment in trading. Readers shall solely be responsible for profit/loss





      
                            

TATA INVESTMENT - THE ROCK STAR

What a day for readers of jerrytechnicals !!!!

I wrote about Investment pick of Tatachemicals 10 days back and what a whopping move.

The stock clocked a high of 582 and closed at 560.

Amazing 22% return so far.

NEXT: Staring down the barrel

Disclaimer : This is not a recommendation/ solicitation of any order to buy or sell, but Jerry's view on indian stock market. I assume no responsibility for any opinion or statement made in this blog. Readers are urged to exercise their own judgment in trading. Readers shall solely be responsible for profit/loss

Initiating Coverage Tata Investments ( Tata investment Corporation, 501301)

TATA INVESTMENT CORPORTATION

Tata Investment Corporation (TIC) is a non-banking financial company.

Earlier named the Investment Corporation of India, the company is primarily involved in investing in long-term investments such as equity shares and equity-related securities.

TIC was promoted by Tata Sons in 1937 and went public in 1959, when it became one of the few publicly held investment companies listed on the Mumbai Stock Exchange.

Areas of business


TIC, along with Tata Sons, promotes the Tata Mutual Fund. The company has built up a significant portfolio of investments.

Location


The company is located in Mumbai, India.

CHART LOOK

How do we plan to trade this :

We plan to make an entry at fibonacci confluence level of 430 - 420.

We will then hold for a target of 660 and 780.

We will use risk reward ratio of 1: 3 to arrive at stoploss.

We will also invest part of the corpus as long term investment for a target of 1350.

NEXT: Best trades of last week

Disclaimer : This is not a recommendation/ solicitation of any order to buy or sell, but Jerry's view on indian stock market. I assume no responsibility for any opinion or statement made in this blog. Readers are urged to exercise their own judgment in trading. Readers shall solely be responsible for profit/loss