TORRENT CABLES

This scrip no seems to be in the accumulation phase, moving sideways and getting ready to jump to 400 in the next upmove. The expected eps for the current year is around 40 and conservatively assuming a pe ratio of 10, the price should touch 400 within a year.

Great investing tips from Rakesh Jhunjhunwala

"Markets are like women -- always commanding, mysterious, unpredictable and volatile," quipped 'Big Bull' Rakesh Jhunjhunwala (inset) while addressing a meet organised by Shailesh J Mehta School of Management, IIT, Bombay on August 10.

A champion broker, often termed as Warren Buffett of the Indian stock market, Jhunjhunwala had a full-to-the-brim auditorium spellbound as he traced how he made his fortune from a starting capital of Rs 5,000. His career path is stuff dreams are made of.What earned him fame is his skill to pick under-valued stocks. Some of his renowned calls are Karur Vysya Bank, CRISIL and Bharat Electronics. There are, however, quite a few more. Talking about his company RARE (derived from the first two letters of his name and that of his wife Rekha) Enterprises, Jhunjhunwala says, "My company has only one client -- my wife -- so that I don't need to handle others' money."One of the biggest bulls of the Indian market, Jhunjhunwala believes in trading by the hunches. "If in doubt, listen to your heart," is what he tells young investors. Extremely optimistic about India's growth story, Jhunjhunwala shared with his audience some valuable insights about the Indian economy, future of Sensex. Read on.

What paved the way to Jhunjhunwala's success?

A democratic growth process rather than an imposed one and a biological evolution, pat comes the reply.
He owes a lot to resurrection of a dormant and vigorous entrepreneurial gene of India. "The country has rediscovered its confidence."
There has been a strong improvement in India's macroeconomic indicators, combined with a robust banking system.
Improvement has also been observed in India's corporate performance, powered through productivity gains. Jhunjhunwala is convinced that on-going reforms would have a multiplier effect on India's economy.


Jhunjhunwala's investment strategies

Jhunjhunwala learnt investment strategies the hard way. And he was more than willing to share it with his audience. Here are a few gems from his book of learning
Necessary for any investor is optimism.
Be opportunistic but wait for the right moment
Study the market thoroughly. Refer to history
Maximise profits and minimise losses
Invest in a business not a company
Always have an independent opinion. Observe and read relevant information with an open mind
Be happy with your gains but learn to accept losses with a smile
Be prepared for challenges and risks
Predicting a brighter and better future for the Indian markets, Jhunjhunwala signed of by saying that the Indian markets will reach the peak by 2010.

Gems from Jhunjhunwala

For beginners in the market, here are a few invaluable gems from Jhunjhunwala's book:
Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it.
Do something you love
The means are as important as the end
Aspire, but never envy
Be paranoid of success -- never take it for granted. Realise success can be temporary and transient
Build a fighting spirit -- take the bad with the good
When you see a horizon, it seems so distant. When you reach that horizon, you will realize how many more horizons are within reach

Gems from Jhunjhunwala

For beginners in the market, here are a few invaluable gems from Jhunjhunwala's book:
Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it.
Do something you love
The means are as important as the end
Aspire, but never envy
Be paranoid of success -- never take it for granted. Realise success can be temporary and transient
Build a fighting spirit -- take the bad with the good
When you see a horizon, it seems so distant. When you reach that horizon, you will realize how many more horizons are within reach

'India has everything

Rakesh Jhunjhunwala believes that India has all ingredients that the stock markets value and hold in high regard. Some of them are:
Efficient capital allocation
Sustained earnings expansion driven by growth and productivity
8 per cent+ real GDP growth + 4%+ Inflation = 12%+ Nominal GDP growth
Corporates to grow faster than unorganised sector
Operating and financial Leverage to kick-in
Corporate earnings to grow at 18%+
Favourable framework for equity investing
Rising savings, yet low equity ownership -- significant potential
Corporate governance
Transparency
Effective regulation
Electronic trading
Dematerialisation
Tax paradise for equity investing under the STT regime

'Be realistic'

Jhunjhunwala also spoke about his beliefs that made a case for sustaining the India growth story.
He said enormous wealth was created over the last five years because opportunities in India have grown manifold.
Admitting that gains were going to be moderate in future unlike the manifold rise over the last few years, he advised investors to be realistic in their expectations.

'The market is always right'

Jhunjhunwala takes the cue from Warren Buffett's words: "Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well."
"Blindly following stock picks by big investors is not a wise thing to do," he warns investors. "I don't think the government is necessarily interested in hurting growth. The government is interested in growth with controlled inflation.""The market," he says, "is always right. Markets cannot be taught, they have to be learnt."
"We must have an attitude where we must balance fear and greed," was the hot tip by one of India's most high-profile investor.

Why growth will continue

Speaking on the strength in India's fundamentals, Jhunjhunwala elaborated on forces that would sustain the growth momentum.
According to him, growth enablers (such as favourable demographics, higher base of skilled people and education base), liberalisation catalysts (such as competition), fall in interest rates, multiplier effect (on account of reforms), structural changes in quality of corporate earnings and micro trends (such as change in mindset of companies who are aspiring to become global) are likely to drive India's growth story to a higher level.

Technical analysis to predict share price movements

http://economictimes.indiatimes.com/ET_Features/Financial_Times/Technical_analysis_to_predict_share_price_movements/articleshow/813315.cms

• A technical analysis of securities is a study of past price and volume trends to judge the direction of future price movements of scrips. The movement of share prices follow a random pattern. Bulls and bears run the show. How long each of these phases would last, no one can say for certain.
• However, investors can resort to technical analysis to arrive at expected movements of stock prices. Technical analysis assumes that prices take a random walk and one can judge the future price movements based on the past trends. It thus helps investors to take their investment decisions. However, ultimately, it is the market sentiments that determine the prices ruling on the stock floors.
• Technical analysis has two main methods - one dependent on intuition and interpretation, the other on analysis of data.
• Under the first method, analysts interpret price charts depending on the pattern of movement - head-and-shoulders patterns, double-bottoms, flags and pennants etc. These patterns are used by analysts to predict share price movements.
• In case of the other method of technical analysis, analysts rely on complex calculations of numbers, to crunch raw price and volume data. After this analysis process, the secondary indicators, i.e., oscillators, moving averages etc, are calculated and used to spot buying or selling opportunities.
• Analysts use software, scientific methods, complex equations and complex mathematical formulas to derive indicators. Moving averages Generally, there are two kinds of technical indicators. One type (including moving averages) is best-suited to track an upward or downward trend. The other (including oscillators) is most useful in tracking sideway movements.
• Among the trend-following indicators, the best-known is the moving average, which charts the average price of stocks over a period of time. With each new calculation, the oldest observation used in figuring the average is dropped and the most recent is substituted. Thus, a ten-day moving average would be calculated using prices from the past 10 days. Generally, analysts use 2-3 moving averages to signal when to buy or sell. Then they watch closely to see when the averages begin to cross one another. They can also build moving-average envelopes around prices by adding and subtracting a fixed percentage of the average to itself by, putting 'bands' of a percentage point above and below a y-day moving average. In case a daily price moves out of the band and hence out of the envelope might be interpreted as meaning that the market is headed for an extreme.

• Bands
  Analysts apply bands (called Bollinger bands) to spot promising trading time windows as the prices move beyond the bands. These bands are also built around a moving average, but the boundaries of the envelope are related to the volatility of the market. When prices are volatile and harder to predict from the previous day's information, Bollinger bands widen. When prices are relatively steady, the bands narrow. Oscillators Oscillators are generally used alongside moving averages or other trend-following indicators to improve market timing. These indicators generally fluctuate from one extreme value to another around a midpoint line. In case an oscillator hits extreme values or when an oscillator chart diverges from a price chart, it's a matter of concern for the analyst. Oscillators are of various types. Momentum is a running measure of the difference between the latest price and the price a fixed number of days earlier. Stochastic is an indicator of the level of the current price in relation to the high and low prices over a fixed period. This indicator is usually graphed as two lines representing the original indicator and it is a three-day moving average. Moving-average convergence divergence (MACD) is an indicator that is based on the difference between a short-term and a longer term moving average. The result is also averaged and the two are compared. Signals are generated when the two lines cross. The difference between the two lines is called a histogram.
• Relative strength index compares the price of a stock on up-days over a given period to the price on down-days over that same period. The Larry Williams percentage indicator defines the latest price in terms of its range over a recent period. This analysis is undertaken by experts in the field. Now we have pre-defined software to take care of most of the aspects of the analysis. However, making an analysis is one part of the story. The real test is how well one reads and uses the analysis to predict the future stock movements.

Interpreting P/B ratio

The lure of the markets is so strong that an increasing number of investors come flocking with their hard-earned money. The uncertainties, the ups and downs haven't dampened their spirits and investors hope to strike it rich. The adage 'buy low, sell high' works well. So does the good advice 'invest for the long-term'. But certain technical parameters, ratios and numbers is sure to give investors a more detailed picture of the company stock they are pumping their money into. Instead of simply following the crowd, friends or financial advisors, an analysis of numbers will place you in a better position. This approach that involves simple technical analysis and research, ensures your money is not invested in the wrong places. A well-researched investment could be time-consuming. But it assures the safety of your investment, and brings in an element of predictability into the highly unpredictable volatile markets. Price-to-book ratio (P/B ratio) offers a more tangible measure of a company's value than earnings do and hence it is evaluated by most conservative investors. P/B ratio is used to compare a stock's market value with its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value. P/B is equal to share price divided by book value per share. Let us first begin with understanding what book value is. Wondered how much a company is really worth and what is its correlation to its stock price? Book value reflects a company's worth. It can be defined as the company's assets minus its liabilities. If the company pulled its shutters, this number suggests how much would be left after all the outstanding obligations are settled and assets sold off. A company that is performing very well will always be worth more than its book value for its ability to generate earnings and growth. In essence, book value is what would be left over for shareholders if a company closes its operations, pays off its creditors, collects from its debtors, and liquidates itself. Now coming back to P/B ratio, this is a good matrix to value stocks of companies with large tangible assets in their balance sheets. A lower P/B ratio can mean that the stock is undervalued or something is fundamentally wrong with the company. This ratio gives you an idea if you're paying too much for what would be left if the company declared bankruptcy. P/B ratio is particularly useful for value investors, who are always on the hunt for low price stocks that the market has neglected. If P/B is less than one, it normally tells investors that either the market believes the asset value is overstated, or the company is faring very badly in terms of returns on its assets. P/B ratio indicates the inherent value of a company. Many investors have successfully used this to discover dormant stocks, held them over a long term and booked good profits. Though it has its own flaws, it offers an extremely easy tool for identifying clearly under or overvalued companies.

PARADYNE INFOTECH

The company has reported a Q1 EPS of Rs. 5.5 ( standalone) and Rs 7 ( consolidated). Considering that the profits have been consistently increasing every quarter since the company got listed, we can safely assume that the 2007 -08 EPS would be in the range of Rs. 25 ( consolidated) if not more. Allowing a discounting of around 15, we can safely predict the price to touch Rs. 400 in one years time.

However, I suspect that the company may not pay a dividend this year. If this happens, then it may dampen the sentiment. However if it maintains 10 % or increases it to 15 % , then the price can easily zoom to Rs. 300 .

RELIANCE DIVERSIFIED POWER SECTOR FUND

High voltage, high returns

• 
  India’s only power sector mutual fund comes with a high-risk, high-return profile. So, be cautious while investing in it
• Frequent power cuts in your homes this summer may have frustrated you, but that was also a subtle reminder of an opportunity that came with it. It’s called Reliance Diversified Power Sector Fund (RPSF).
• RPSF holds around 20 stocks. The fund manager follows a buy-and-hold philosophy and does not churn its portfolio frequently. RPSF manages its cash positions aggressively in search for any opportunities to buy.
• RPSF has tasted success in several power scrips, most notably in Siemens, Crompton Greaves and Jaiprakash Associates. RPSF’s growing corpus (Rs 1,176.3 crore in June 2007, up from Rs 552.2 crore in January 2006) does not bother the fund manager.
• Returns. RPSF has delivered strong returns since inception (April 2004; 60 per cent as against 34.3 per cent by its benchmark India Power index) on the back of the surge in infrastructure and power sectors. As on 29 June 2007, RPSF returned 88.9 and 65.7 per cent in the past one and three years respectively, as against 56.3 and 48.7 per cent by its benchmark index. Besides, Reliance MF enjoys a good track record across its equity and debt schemes. As RPSF is a sectoral fund, expect the fund to be more volatile than a plan-vanilla diversified equity fund.
  Against the 10th 5-year plan’s (2002-07) requirement projections of around 1,00,000 MW of electricity in the country, industry estimates claim that the power sector is on the right track. And in the thick of the action, spotting opportunities is RPSF with the potential to give you high returns, albeit with a much higher risk. Power cuts don’t look all that bad now, do they?

STOCKS TO BE WATCHED ;ELECON ENGINEERING

• The recommendation for buying this stock appeared in a recent issue of Outlook Money. The company is into manufacturing of Material handling equipment.
• The link to this article http://www.outlookmoney.com/scripts/IIH021C1.asp?SectionId=1&CategoryId=132&ArticleId=6687&NoCache=8%2F2%2F2007+9%3A01%3A02+PM

• With the stock gaining over 12,000 per cent in the last 5 years and a strong order book, Elecon Engineering is set to reap profits
• 
  Elecon Engineering Company pioneered the manufacture of material handling equipment in India.
• In the last four decades, it has designed and implemented several landmark projects in India and abroad. Its product range and services includes design, engineering, manufacture, supply and erection. Through its equipment it has made its presence felt in core sectors like fertilizer, cement, coal, power generation, chemicals, steel plants and port mechanisation. Its business also includes providing customised gearboxes for steel mills, high-speed turbines, sugar mills, marine vessels, plastic extrusions, antenna drives as well as for satellites related to the Indian space programme.
  
  The in the financial year ending March 2007, Elecon has achieved net sales of Rs 723 crore against Rs 442 crore in the previous year,registering an outstanding growth of 63 per cent. The profit after tax for the year is Rs 54.90 crore, up 97 per cent. In the last quarter of FY07 itregistered sales growth of 52 per cent while operating profit and net profits went up by 60.22 and 69.34 per cents respectively. The company has also managed to improve its net profit margins to 6.52 per cent compared to 5.85 per cent Ianthe same quarter last year. The company’s board has recommended a bonus of 2:1.
  Investment rationale
  The robust investment capex lined up by Indian firms across industries will increase demand for the company’s products. Its material handling and power solution segments are expected to see huge inflow of investments. Elecon recently received a
  Rs 57.70-crore mechanical equipment order from Bharat HeavyElectricals Ltd. It will undertake design, engineering, civil and structural work, erection and commissioning of mechanical equipment for lignite stone handling system of Surat Lignite Power Plant of Gujarat Industrial Power Company. In April, the company bagged an NTPC contract worth Rs 229 crore for supply and installation at a coal handling plant. The stock has gained over 145per cent in last one year and over 12,000 per cent in the last 5 years. Webelieve that the company will continue to attract investors in future given its strong financial performance and healthy order book.

THIS COMPANY IS A GOOD CANDIDATE TO BE WATCHED AS A POTENTIAL MEMBER OF MY EQUITY PORTFOLIO.

PARADYNE INFOTECH

As I pointed out before, this seems to be a multibagger.Even in the last week, when the market went topsy turvy, its price did not go below 143. Today, the market recovered, and almost redictably, paradyne once again hit the upper circuit of 151. The price should surely touch 200 by year end. That is , 33 % appreciation in about 6 months.

POSTINGS FROM A PREVIOUS BLOG

RIGHT ON TARGET
Remember my post sometime back about Para dyne infotech.The scrip has since appreciated by almost 25 % and should hit my target of 200 by year end.
Posted by The Money saver at 3:21 AM 0 comments
Saturday, May 26, 2007

Interesting article
There is s very good article in the latest issue of Outlook business, titled "Broker Advice". I could not find the article on the web and so am not able to post a link. However I summarize it here :The author Dhruv Rathi asks you not to invest on the basis of your broker's advice or on the basis of recommendations in the media. He lists numerous cases in the last year where scrips recommended by various brokerage houses and equity research analysts , have lost heavily ( as high as 50 % in some cases ) . The reason which he gives for this is something that I have long suspected . According to insiders at one of the leading brokerages, stock ideas are first used to build proprietary positions, then recommended to big clients - institutions and mutual funds- followed by private banking clients, friends and associates and finally to the media and newswires. Thus the common investor usually gets to see the broker advice/report well after the big moves have taken place and mostly just before the offloading starts. Little wonder then that they make little or no money on brokerage recommendations, as these come into the public domain only after the key clients have made their purchases. Doesn't this sound similar to what I said while recommending "paradyne infotech", in my last post.So, the moral of the story is that these recommendations should be taken more as food for thought, rather than for making investment decisions without doing your homework.
Posted by The Money saver at 9:56 PM 0 comments
Thursday, May 24, 2007

Multibagger
PARADYNE INFOTECH: This , I think is a multibagger in the making.The company which came out with a public issue just 2 yrs back has been constantly increasing its profits for the last five quarters. Right now, the market pundits are accumulating this scrip , and once they have accumulated suficient nos, they will start throwing recommendations in the newspapers, magazines, tv programs etc. I tink this scrip should touch 200 by the year end. It is a sound investment. It is currently quoting around 125/-.
Posted by The Money saver at 4:01 AM 0 comments
Sunday, May 13, 2007

Interesting article.
There was an interesting article in the Economic times today, telling about how an investment of Rs. 30 lakhs through SIP @Rs. 25000/- per month for the last ten years in various mutual funds could have made you a crorepati. It should be an eyeopener for those crores of Indians who still stick to the post office and bank fds, as far as investment is concerned. The following is the link to the article :http://economictimes.indiatimes.com/Heres_how_to_let_your_money_work/articleshow/2039232.cms
Posted by The Money saver at 2:34 AM 0 comments

THE WALL STRET JOURNAL CLASSROOM EDITION

Now, this is a very useful resource to inculcate financial fitness in your kids and teenaged sons and daughters. It can be found at the following url :

http://wsjclassroomedition.com/

FINANCIAL FITNESS

Why being financially fit is a mustKartik Jhaveri, Moneycontrol.com

American research reveals two things:
1. America is a debt-ridden nation.
Most students are neck deep into loans. By the time they graduate, and thereafter, most people spend practically all their life paying some loan or the other. If they are lucky they might be debt-free when they touch retirement age.
2. Financial worry is the top cause of stress.
Most people don't know this; chronic financial worry makes life miserable.
Financial health is not very different from emotional or physical health. We do a lot of things to keep ourselves physically fit.
However, we don't give financial health equal status with physical or emotional health. The next time you feel stressed, stop and think. Who do you really need to visit: your doctor or financial advisor? If financially fit, you can take a variety of risks and you are your own boss.
Usually, the number one cause of stress comes from work, peers, colleagues, a competitive work environment and often, from our boss/bosses. Being financially fit also means you have the freedom to carry your resignation in your pocket. You can afford to be really picky.
Now, the circumstances to get financially fit are easier than ever before, given that you are educated and earning fairly well. If you do things properly you could be fit in a few years. The country is on a high growth trajectory and it is up to us if we want to take advantage of it.
But being debt fee depends on the lifestyle that we wish to pursue. For this Rs 30 lakh (Rs 3 million) can be more than enough. Or on the flipside Rs 90 lakh (Rs 9 million) may also fall short.
The modus operandi would be to first get to your own magic figure and then have it invested in a manner, where inflows keep flowing into your bank account forever no matter what.