Saturday, August 8, 2015

FNO lot sizes revised...

SEBI revises the market lot and minimum lot value criteria.

Minimum lot value revised to 5 lac. Minimum lot size for stocks reduced to 50 and in multiple of 25 there after.

For high value stocks minimum lot size fixed at 10 and multiple of 5.

Index minimum lot size fixed  at 10 and multiple of 5 there after

At current nifty value of appx 8500. New Nifty index lot will be 60.

Bank nifty will be 30...applicable from
Oct expiry   ..   

http://www.sebi.gov.in/cms/sebi_data/attachdocs/1436782665000.pdf

Friday, August 7, 2015

How to Select a Fundamentally sound company......

Hi All,

Got a nice What's App forward on selecting a small Cap Company.... worth reading

Buying Strategy for Small Caps

1. Go for companies with low debt ratio (preferably less than one)
2. A high interest coverage ratio (above 3x) and a high return on equity are big advantages
3. Avoid companies with huge liabilities in the form of foreign currency convertible bonds / external commercial borrowings
4. Look at the quality of the management, its governance standards and how investor-friendly the company is.
5. Mid-cap and small-cap companies can be future market leaders, so be patient with your investments

Those who wish to invest in small-cap stocks should do so only if they have a long investment horizon and tolerance for volatility. Small-cap stocks suffer the steepest falls in a bear market and rise the most in a bull market. An investor should stay invested for at least three-five years to allow their portfolio to gain from at least one bull run.

Benefits of Investing in Small Caps

1. Huge growth potential: The first and the most important advantage that a small cap stock gives you is their high growth potential. Since these are small companies they have great scope to rise as opposed to already large companies.
2. Low Valuations: Usually small cap stocks are available at lower valuations compared to mid & large caps. Hence, if you invest in good small cap companies at initial stage and wait for couple of years,  you will see price appreciation not only because of growth in top line and bottom line but also due to rerating which happens with increase in market capital of the company.
3. Early Entrance Advantage: Most of the fund house and institutions do not own small caps with low market cap due to less liquidity which make it difficult for them to own sufficient no. of shares. This gives retail investors an opportunity to be an early entrant to accumulate such companies shares. When company grows in market cap by delivering consistent growth and becomes more liquid, entry of fund houses and institutions push the share prices up giving maximum gains to early entrants.  
4. Under–Researched: Small cap stocks are often given the least attention by the analysts who are more interested in the large companies. Hence, they are often under - recognized and could be under-priced thus giving the investor the opportunity to benefit from these low prices.
5. Emerging Sectors: In a developing economy where there are several new business models and sectors emerging, the opportunity to pick new leaders can be hugely beneficial. Also the disruptive models in the new age is leading to more churn and faster growth amongst the nimble footed smaller companies.

Concerns while Investing in Small Caps

1. Risk: The first and the most important disadvantage a small cap stock is the high level of risk it exposes an investor to. If a small cap company has the potential to rise quickly, it even has the potential to fall. Owing to its small size, it may not be able to sustain itself thereby leading the investor into great loses. After all, the bigger the company, the harder it is for it to fall.
2. Volatility: Small cap stocks are also more volatile as compared to large cap stocks. This is mainly because they have limited reserves against hard times. Also, it in the event of an economic crisis or any change in the company administration could lead to investors dis-investing thereby leading to a fall in prices.
3. Liquidity: Since investing in small cap stocks is mainly a decision depending upon one’s ability to undertake risk, a small cap stock can often become illiquid. Hence, one should not depend upon them for an important life goal.
4. Lack of information: As opposed to a large cap company, the analysts do not spend enough time studying the small cap companies. Hence, there isn’t enough information available to the investor so that he can study the company and decide about it future prospects.

Cheers Hrishi

Tuesday, August 4, 2015

And the God opens a Dmat Account ! ! !.. Why are you waiting.

Tirupati Trust opens demat account on Balaji's name to enable devotees to donate shares and securities 
HYDERABAD: Balaji, the world's richest god at Tirupati, has now opened a demat account to enable devotees to donate shares and securities, after finding it a tedious task to get physical share certificates dropped in Hundi transferred on his name.

Considered the first globally for a shrine management, Tirumala Tirupati Devasthanams (TTD) has opened demat account (1601010000384828) with the Stock Holding Corporation of India.

PS Reddy, MD and CEO of Central Depositories Service (CDSL), told ET that the innovative move by TTD was primarily aimed at addressing the hassles pertaining to transferring the physical share certificates. "TTD has been receiving physical share certificates as donations by devotees in its open Hundi, which indicates that devotees are interested in donating shares.

TTD viewed that enabling devotees to use the demat account for donations helps both." Reddy said though TTD is the first shrine management in the country till date to open a demat account, CDSL would explore similar interest from other temple managements in other parts of the country that were receiving shares as donations.

While acknowledging that the temple has been receiving thousands of share certificates valuing lakhs of rupees, a TTD top official, however, refused to divulge details on the quantum and value of shares received so far. 

Read more at:

Monday, August 3, 2015

A must read for a trader....

One Saturday morning, while he was sitting at his computer studying the market, David's 7 year old daughter came up, tugged at his shirt sleeve, and said, "Daddy, why aren't we rich?"
He looked his child in the eye, and thought to himself, what a great question - why aren't we rich?
As she stood there expectantly waiting for an answer, he struggled to come to grips with the realization that, although he had focused his undivided attention on nothing but creating wealth for more than 15 years, he was still broke.
He had bought and sold hundreds of Stocks and several properties over those years, but had never made any real money to speak of.
He looked at his daughter, and asked, “What makes you think we aren't rich, sweetheart?”
She looked at him sternly and said, “Because you said that if we were rich, you and mom wouldn't have to go to work any more, and you both still work all the time.
You said we could live near the beach and play in the sand every day. I want to know what you are doing about that. When can we go and live at the beach?”
There’s nothing like a child to cut straight to the heart of the problem - and what was he doing about it?
“We're not rich because daddy made some mistakes,” he finally answered.
“What kind of mistakes, daddy?” she asked.
“Well, I bought some shares that were going down and then didn't sell them soon enough. Then I bought some houses but sold them again just before they went up in price.”
“Why did you do that?” she asked.
He had to think long and hard about that. He had no reason to buy shares that were going down in the first place. He had no reason to hold on to them when they kept going down. He had no reason to sell the properties either, come to think of it.
Her logic was flawless – why wasn’t he doing better financially than he was?
He knew in that moment that he had to change his strategy.
He owed it to himself and his family to finally get his act together and make some changes - that was the day the pain of not living up to his potential made him sit down and write out his stock market trading plan...his trading strategy and rules – he had to have a life raft.
He started by writing out his vision - what he wanted his life to look like when he became a successful trader and investor, then worked backwards from there - through the details of how he was going to achieve his dream.
He saw in his mind the 4 bedroom penthouse on the beach, the red Ferrari 360 Modena, the 80 inch plasma screen computer monitor in an office overlooking the surf beach 17 floors below, the family holidays, the million dollar donations to worthwhile causes and children's charities.
He visualized all the tremendous benefits of becoming a successful trader, investor and philanthropist.
He realized that his main problem all this time had been that he was afraid of losing, and that fear was just too expensive to let it control his life any longer! He had been playing not to lose, instead of playing to win.
He decided he would never again sell a property unless there was a compelling reason to do so.
He decided that he would no longer accept anything less than perfect execution of his stock trading plan.
He decided that he would take every trade entry signal his system gave him and follow his trading plan as if his life depended on it.
As if, after each trade was closed out, he had to stand in front of a panel of super traders, and explain his actions to them - why he entered where he did, where he placed his stop losses, why he exited when he did.
And if they weren't convinced he followed the rules of successful trading, he would be taken out and shot!
This certainly focused his attention on only trading strong trends - trends where the price bars were trading above their respective moving averages for long trades, or below for the moving averages for short trades, and the Stock price was moving strongly in one direction.
He pretended that if he couldn't justify his trading decisions to his trading Mentors, he was dead...
That was the day he resolved to study his selected group of Stocks, the ones that had a track record of trending strongly, every day.
He would then take every trade his system produced, put his stop loss orders in the market as he entered each trade it a place where the trend had to change to take him out of the market, and he would hold every position until the trend changed.
He would act 'as if' he was a great trader, even though his record up to that point had been less than inspiring...
That innocent question from a child turned out to be the start of David's successful trading career.
He started to trade profitably and consistently for the first time in his life. He thought he was doing well, and indeed he was making money.
He knew from his wealthy mentors that rich people are different; they make rational decisions based on facts, not emotions.
They understand the value of money - they respect it as a tool for building a better world. They buy well for logical reasons and hold until there is a valid reason to sell.
Then one day, he closed out a trade, and excitedly told his daughter, “Daddy made a big profit in the market today darling, come and look and see what I did.”
His daughter came over to the computer and looked at the screen as he excitedly showed her where he had bought a Stock and then sold for a $13000 profit. She looked at him and said, “But daddy, it's still going up, why did you sell now?”
His smile faded as the power of that question sunk in...why had he sold it?
What was he doing getting out of such a strong trend just to take a profit? What would his trading Mentors say?
She was right...the market was still open, so he bought back in again. He had never been able to bring himself to do that before - he was becoming a great trader!
The rally continued and he kept buying more as it rallied. The trend finally changed, but his profit on that trade, when he eventually got a valid sell signal, was $34500!
His daughter's simple, logical question 5 weeks earlier had been worth over $20000!
That was the last time he ever got out of a trade based on his emotions. His fear of the market was gone - thanks to some simple questions from a 7 year old...
So now, it's your turn.
Whenever you are preparing to place a trade, find a small child, even if you have to borrow one, and ask them what the trend is. Then don't trade the other way!
If your trading isn't as great as you know it could be, decide to create a trading plan now that will become your life raft.
Remember, fear is just too expensive folks.
If you are afraid of losing money, reduce your position size until your fear goes away.
Once you have made a series of small profits, you will be trading with the markets money and you can increase you position size according to your growing confidence and account balance.
If you have a series of losses, reduce your position size again until you get back on the right track. Stick to your trading plan once you have something that works consistently.
Then, just go out and do!!