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Tag Archives: dalal street

A stand against thundering herd

Taking stand against a herd though often threatening for the short term, could be highly rewarding over the long run, for those who survive the initial onslaught. The correlation becomes stronger when one is faced against a thundering herd on the stock market.

Research desk at Anavaran dared to be ‘cautiously greedy’ when fear was in high demand on the Dalal Street. In December 2011, market were at sweet spot offering high upside potential with limited risk of downside. However, nearly 20% rise in benchmark indices and more than 50% surge in some of the fallen heroes of yesteryears have bridged the price-value mismatch prompting  a change in our outlook to ‘prudently neutral’ as we saw an end to Great Indian Share Sale.

the coming downtrend

As stated in our last article we still see money making opportunities in the stock market and would not like to be branded a bear, at least not as of now. Since then, Sensex have risen over 8% to cross our base case target of 18,000. Sensex is now inching towards the top end of our forecasted range of 12000-20000 for 2012. However, it would be prudent to reiterate that there are lesser profitable investment avenues than those available at end of 2011 and even these require longer investment horizon of at least 18 months to materialize.

Games that Mr. Market Plays

To get a feel on the market, let us have a look at the investment strategies employed in the share market. In our opinion, at any given time, there are three games being played in the share market; that of investment, speculation and gambling. In investment, gains come from increase in size of cake, while in speculation and gambling usually one persons gain comes from other persons loss.

Investment

Value style of investment, a philosophy that we @ Anavaran adhere to, seeks to find disparity in underlying value of a company and price of the stock. The time horizon is the same time horizon it takes to work out the company’s strategic plan and business cycle to complete, usually 2-3 years.

From Diwali to Christmas of 2011, share markets were ideal for value style of investments. A value investor could find oceans of price value disparity during this period. Some of these stocks that we rated a BUY during this period include Sintex, JSW Steel, Onmobile, Nocil, Punjan & Sind Bank etc.These ocean of disparities narrowed down to rivers in Jan 2012, (BUY-Allahabad Bank) and such disparities are not more than rivulet streams currently. While we like companies such as Atul Ltd, Aditya Birla, Tata Chemicals, Sandesh we think price is not correct to enter these stocks.

Speculation

The speculators, who mostly rely on technical analysis and charts, don’t care a lot about the underlying value of the company. They are largely concerned with the underlying demands of buyers and sellers in the stock. They are looking at the beauty contest aspect of the stock market -wiil people the stock and bid it up or not. It’s judging human nature. There playing field spans from fundamentally strong companies to those which are mostly dubious in nature. PSB which was more of a value play in late 2011, has turned  out to be speculators favorite since news of LIC buying 5% stake in the company hit the markets.

speculators, one mans gain other mans loss

Gambling

Last and also the least are great gamblers of the share market who are just speculating on the speculator, making a wager because they feel they have got a instinct that knows what’s going on in the market. The stigma  of converting the share bazaar to satta bazaar lies on them. With their perpetual search for GREATER FOOL, Evergreen SELL stocks like Avon Corp, Pipavav, Jupiter Biosciences,  Karuturi Global, KS Oil and hordes of other empty promises are gambler’s favorite bet in share market.

Leap to Success offer 

Would like to take this opportunity to introduce our “Leap to Success” offer. Being in a Leap Year we are offering 29% discount on our stock recommendation service plus additional gifts. We promise it to be once in a 4 year offer, so grab it at the earliest. As all our subscription services come with 1 month trial period, with full moneyback guarantee, so its virtually a risk free deal. For more details, please refer “Leap to Success” link.


Leap to Success

Leap to Success offer

Being in a Leap Year, here is once in a four year offer for our readers. Enjoy 29% discount on our stock recommendation service plus additional gifts along with access to our multibagger stock picks.

To avail this mouthwatering ‘Leap to Success’ offer, register with us before 29th Feb 2012 and enjoy following benefits:

For the performance of earlier value stock picks please refer our home page. Our top stock picks revealed for free this Diwali have generated 20% return in three months. Of these, Onmobile’s stock price increased over 50%, while Nocil and Punjab & Sind Bank have risen over 20% since our BUY rating in Oct 2011.
Our research desk is led by Ashish Tripathi, who was ranked 4th amongst world’s leading analysts by Wall Street Journal 2010.  His stock recommendations generated 89% return, compared to industry average of 47%.
ragging bull sensex

Moreover, our premium services come with 1 month trial period. In an unlikely event of subscriber wishing to cancel the subscription we offer 100% money back guarantee during the first 30 days of the subscription. Thus it’s a risk free deal. Hence, no harm in give it a try.

For the perpetual question of why one should pay, even less than newspaper price, for financial advice when there market is flooded with free investment calls here is an ode to free financial advisor:

 

Professing to be friend, philosopher and guide

My free  financial advisors took me for a ride

Chanting disclosure mantras of ‘nothing to hide’

Was surprised to find them on the other party’s side

Well known, but seldom told truth about free advisors

They are not advisors but well versed sellers

A good point to remember about financial companies

They are here to make profit and not run charities

 

In case of any queries please feel free to chat with our support reps by  clicking on the box at right hand bottom of the site. In case of us being offline, forward your queries to support@anavaran.com.

So, hurry up, don’t miss this once in a blue moon offer.  After 29 Feb, we shall be repeating the offer only in 2016.

 


Season sale ends at Dalal Street!!!

Season sale ends at Dalal Street!!!

The leap year brought the much needed upward leap to share markets. In our New Year Investment note, when Sensex was hovering around 15500, we had highlighted change in our outlook from neutral to ‘cautiously bullish’. Fall in price as well as appearance of green shoots at inflationary and currency fronts were the key reason for the positive stance.

Market Outlook

While the economic front hasn’t changed a lot since the turn of the year, with nearly 15% jump in benchmark indices share market has largely bridged the price-value mismatch gap. Stock prices of some of the companies we liked have risen over 50% from their recent and most of them have breached our bear case target price. The surge has proven to be a double edged sword. While the surge in share prices has surely improved the aggregate return of our recommendations, it has raised the necessity of treading with increased caution henceforth. With the end of Great Indian Share Sale, making money would be much more difficult, though not impossible from hereon.

With bear case target of Sensex, 16500 breached we believe factors like euphoria on budget, tax savings driven investments, easing of inflation and currency rates (purely due to higher base effect) will provide a fillip to benchmark indicies over the coming months. Despite, high probabilities of Sensex attaining our base case target of 18000 by end of this fiscal year we believe it is wise for retail investors with short term horizon to stay away from the markets.

Glimpses of our stock ratings

One of the peculiar features in making investments has been a passion to BUY at high prices and SELL at low. When market was trading around 15500 financial media buzzed with doomsayers and now the same financial community is screaming a BUY at nearly 20% higher prices. Same people who flock at Season sale at malls and bazaars get repelled by low prices in investment arena.

Going by our 2012 investment strategy of “Aiming for 20 thousand for Sensex, but prepared to face 12 thousand. 20-12” We foresee upside from current levels looks limited to 20,000 for Sensex. On the downslide, Sensex could slide to 12000 levels in the worst case scenario and there is string of events in the making which could make this doomsday like scenario come true. Being prudently neutral at the moment we take learning from John Templeton’s following quote:

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria”

For investment opportunities, Small is beautiful still looks good, especially for mid-sized public sector banks. With most of the trading at price-to-book value of and P/E of 0.5x and 5x, their stock prices are poised to double within 2-3 years. Research desk @ Anavaran has been bullish on these banks since October 2011 and has BUY rating on many of these, of which Allahabad Bank and Punjab & Sind Bank are in public domain.

Many of mid-cap IT companies, which formed part of our Small is Beautiful investment theme, have seen sharp rise in share prices prompting us to moderate our positive outlook. Of our BUY calls in IT space, Patni Computers has risen nearly 80% since our BUY rating in August 2011 to attain our target price of Rs475 in Jan 2011.

Onmobile Global, which formed part of our Diwali picks has increased 30% since our BUY call and still offers 20% upside from current levels. Similarly, Nocil’s stock price has risen over 20% and has potential to further rise 30% and more over the coming year.

Outlook on FMCG, a sector we liked for most of 2011, underwent change from positive to neutral largely due to growth in share price. We reversed our rating on HUL from BUY to SELL on 08 Jan 2012.

We have been having a relook at our past ratings like S Kumar, IFB etc of 2009-2010 era who have fallen more than 50% from our previous target price and look good at current level. Hoping to rediscover some cats with nine lives over there.

Right Company, wrong price: Atul Limited, Aditya Birla Chemicals

Evergreen SELL: Pipavav Defence Offshore, Jupiter Bioscience, Avon Corp, KS Oil, Karuturi Global

Pat on the back

“Anavaran seems to be one of the few analysts who have not fallen for promoters hype.” – A moneycontrol user, yardman’s, comment on Anavaran’s article on Pipavav.

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