S&P CNX Nifty 2984.35 +45.65(1.55%)
RIL 1532.20 +79.75(5.49%)
I mentioned earlier that Reliance Industries(RIL) which commands a significant weightage in Sensex/Nifty would drive/drag the markets further. Todays trade was interesting in this standpoint as Reliance closed 5.49% higher on the Nifty. This means a break of short term resistance of 1401 and 1451. Having broken the critical resistance levels, RIL would contribute to the rise of Sensex and Nifty. For Nifty, I suppose we may well break the resistance level of 3100 in the absense of any negative news.
Though it may sound bullish, I remain cautiously bearsish on both the Nifty and Sensex. Traders can certainly make use of market movements and capitalize on absence of global negatives. For investors, part-invest at these levels and choose your stocks with caution.
Wednesday, March 25, 2009
Wednesday, March 18, 2009
Picking a gem
A lot of people follow the markets more closely than most of us do. They are probably financial gurus in their own right looking for gold by reading between financial statements. But yet, some fail to understand that the best pick is not all about finances and balance sheets! They are all about people who run the business.
Back in 1994, I dont think any financial guru saw enormous value in Infosys unless he did a people analysis and evaluated the management strength which was less hyped those days! Who would have seen value in investing with Dhirubai Ambani in the late 70's. I think to a large extent, the internal stakeholders and the people who know the key people are the best ones to pick a successful story. Financial statements always carry the tag better read as - "Statements are mere indicators of past and present performance and represent no promise on future performance"!
If you were to pick a gold mine, remember - its people first, and then the processes and systems build within. For novices, there is no easy way to judge management talent. But, the current media to a large extent is more helpful in this respect(only in comparison with the past). My journey in investing, I hope would move to the next level of idetifying future gems than just plain investing. Happy investing -:)
Back in 1994, I dont think any financial guru saw enormous value in Infosys unless he did a people analysis and evaluated the management strength which was less hyped those days! Who would have seen value in investing with Dhirubai Ambani in the late 70's. I think to a large extent, the internal stakeholders and the people who know the key people are the best ones to pick a successful story. Financial statements always carry the tag better read as - "Statements are mere indicators of past and present performance and represent no promise on future performance"!
If you were to pick a gold mine, remember - its people first, and then the processes and systems build within. For novices, there is no easy way to judge management talent. But, the current media to a large extent is more helpful in this respect(only in comparison with the past). My journey in investing, I hope would move to the next level of idetifying future gems than just plain investing. Happy investing -:)
Wednesday, March 11, 2009
Realigning investments
Given the current economic scenario, equity as an asset class has taken a severe beating and would continue to remain weak for some time. What other options does one have to generate consistent returns?
At this point, the SIP way of investing makes perfect sense for investments in equity or equity focussed mutual funds. However, one needs to keep in mind that the returns from equity will not be immediate and will take longer to recover. Given this, one can consider churning(selling) a part of the MF/equity portfolio and investing in fixed instruments like company fixed deposits or government securities. Of the two, I would prefer company fixed deposits as these offer attractive returns on investment. On an average(at the time of writing), company FD's offer about 8-11% returns on a YOY basis. However, one should be careful in investing in company FD's and must not be lured just by returns. As a thumb rule, it is safer to look at companies offering less than 13%(looking at the current interest rate scenario). Secondly, look at the ratings and liabilities the company is sitting on. It may not be advisable to invest in companies with huge liabilities.
Recommended portfolio structure:
Fixed instruments 40%
Equity and equity related instruments 20% [Recommend phased accumulation for long term]
Liquid instruments 30%
Debt instruments 10%
I have reduced the weightage of debt instruments as I expect them to yield on par/below fixed instrument returns. At this point, I would prefer avoiding other asset classes like Gold and real estate. Its a great idea to accumulate gold systematically. However, it shouldn't be looked as a short or medium term investment. It is my view that Gold should be looked from a comsumption perspective. Buy as much as you can consume.
For more information on company fixed deposits, click here
At this point, the SIP way of investing makes perfect sense for investments in equity or equity focussed mutual funds. However, one needs to keep in mind that the returns from equity will not be immediate and will take longer to recover. Given this, one can consider churning(selling) a part of the MF/equity portfolio and investing in fixed instruments like company fixed deposits or government securities. Of the two, I would prefer company fixed deposits as these offer attractive returns on investment. On an average(at the time of writing), company FD's offer about 8-11% returns on a YOY basis. However, one should be careful in investing in company FD's and must not be lured just by returns. As a thumb rule, it is safer to look at companies offering less than 13%(looking at the current interest rate scenario). Secondly, look at the ratings and liabilities the company is sitting on. It may not be advisable to invest in companies with huge liabilities.
Recommended portfolio structure:
Fixed instruments 40%
Equity and equity related instruments 20% [Recommend phased accumulation for long term]
Liquid instruments 30%
Debt instruments 10%
I have reduced the weightage of debt instruments as I expect them to yield on par/below fixed instrument returns. At this point, I would prefer avoiding other asset classes like Gold and real estate. Its a great idea to accumulate gold systematically. However, it shouldn't be looked as a short or medium term investment. It is my view that Gold should be looked from a comsumption perspective. Buy as much as you can consume.
For more information on company fixed deposits, click here
Tuesday, March 3, 2009
Tracing Back
S&P CNX Nifty 2622.40 -52.20 (-1.95%)
On Jan 28 2009, I posted a technical update indicating a break of support (2524) within a month. Though, we may be a few days away before the support breaks convincingly, the statement didn’t completely hold. Subsequent posts on Nifty triggering a fall to 2678 once 2848 breaks held pretty well.
For traders, today’s close is extremely important and given the environment(in the absence of any positive indicators), the market should break 2553 soon. It is advisable to exit positions and wait for the next bottom.
The merger of RPL with RIL is pretty much a non-event and an expected one. I wouldn’t be surprised if the ADAG group comes up with a merger of its power subsidiary Reliance Power with Reliance Infra soon. This however, is not going to impact markets in any way.
On Jan 28 2009, I posted a technical update indicating a break of support (2524) within a month. Though, we may be a few days away before the support breaks convincingly, the statement didn’t completely hold. Subsequent posts on Nifty triggering a fall to 2678 once 2848 breaks held pretty well.
For traders, today’s close is extremely important and given the environment(in the absence of any positive indicators), the market should break 2553 soon. It is advisable to exit positions and wait for the next bottom.
The merger of RPL with RIL is pretty much a non-event and an expected one. I wouldn’t be surprised if the ADAG group comes up with a merger of its power subsidiary Reliance Power with Reliance Infra soon. This however, is not going to impact markets in any way.
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