Sunday, January 31, 2010

Be Cautious!

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Dear readers,

In continuation with the previous post, I wish to light on few general but prudence issues related to equity investment. You may well verse about most of these points, still wish to talk again which backs my experience.

We have been completed the procedures to have a PAN card and Demat/Trading account in the previous article. Now you are ready to fuse with the wonderful, equally disastrous world of equity market. You will get the entire terminology related to equity investment on Internet, the good, the bad and the ugly. But it is very much related to your moral fiber, what you are going to absorb. You will not be persuaded with the good or bad by just surfing on net, but with dedicated reading, moreover you are the person who has to weigh things logically.

Take some firm decisions which may protect your precious money in a great way. I too, have suffered substantial loses in my initial days of investing and that’s the source of following weird tips.


Never think about short term gains in stocks until or unless you have:-

Your own funds,

Apt knowledge on the trading systems, traps, inner plays, boiler room tactics etc... ,

Presumably proved or rated strategies (not yet available),

enough time to spend or to stick your eyeballs on the trading terminal.

Because, no one will care your money than you.

Next, “go against the herd”. This is a familiar slogan, but hard to turn up. The common retail investors are often make investment decisions based on what they read in financial dailies/magazines, tips from brokers(mostly paid), or tips from their friends/colleagues(indirectly from brokers again). Never follow intraday/short term tips from brokers/experts because you may be one of the very last persons who transact on that particular call. The real gainers have already been positioned much before you. And mostly, they have started booking their profits by the time you are trying to enter. Means the tips are always reach you late. In some cases, acting reverse to the tips will benefits you.

Simply avoid expert’s recommendations for intraday/short term trading who provides it frequently in public. My simple lay man logic says, if they are ever dead sure on any of their calls at any point of time, they could have stopped this recommendation job for ever. In addition, it is a known factor that some of these experts are backhanders for recommending stocks/IPOs.

You have to keep open your eyes and ears. Try to have in-depth knowledge on scrips where you are going to put your hard earned money. You will not trust any related news until you have verified it’s probability. You can depend the Internet in a big way or the leading magazines/newspapers like, Capital Market, Economic times, Business Standards, Business line, Financial express, business India, Business world, Outlook money etc. But the most important part is, you have to develop a skill gradually to analyze the information to genuine decisions. You can talk with people who you feel your well wishers on the matter. But in most of the cases, your own decision will works better, which shaped after sheer research on the subject than any of the external counsels.


Another conspiracy behind these buying tips is hidden agenda of brokers. They benefits better, when you do frequent transactions and that is their bread. You are paying certain percentage as brokerage on every transactions whether it is buying or selling. Better you reduce the frequency, because you are gaming and the probable winner is broker only with better earnings, whether market goes up or down. They have lakhs of customers and your becoming the common trader, who generates profit for brokers without any commendable gains, but prone to heavy lose.

What all the basic criteria you consider before making decision to invest in a stock. You can ask this question to hundred experts, they will give you answers in 100 ways. Because no benchmarks specified for selecting a stock to invest, else we could have thousands of Buffets/Jhunjhunwalas. People analyzes charts, technicals, balance sheets, P & L statements, quarterly statements, debt reatios, cash flows etc.. etc… All these have their own importance at certain levels. But, what you do?. You are an ordinary person who have little money to invest and wish to multiply it in the least possible time. Will you blindly follow the tips of any magazine, expert, broker or friend?. If the answer is No, I have some simple, but proved norms to select a stock for investment, not for trading.

Select few companies who you feel

have good fundamentals.

have sense in the business they do

understandable future growth perspectives

follows trends or needs of the generation

provides reliable products or services with logical costing.

who's product/services people enjoys with obsession.

Basically, meeting the above norms are enough for you to select a scrip. 90% of firms who can collectively meets up the above criteria will have to do the business in a better way. The demand of their shares should hike as well the price. The simple and known demand and supply theory.

Please stay away from the market, if you have heavy financial burdens. Shares hardly help you for an immediate recovery, but in most of the cases it will dip you more.

Never invest in stocks with any form of lending because stocks are highly inflammable. It may increase your burdens which may drive you tense to abnormal.

Greed and fear are the other two sins. Hard to control, cause functioning on the comatose head. Initial gains can guide you to dangerous levels which might be irrecoverable. Greed is the by product of extreme confidence or in some cases, both are same. I personally know few gentlemen, the worst victims of this anarchy. Greed starts to work unknowingly and it always compels you to take illogical decisions with out much thinking. Most of the times, it pressurize you to act beyond your capacity which turns to hazardous. If a wrong decision unfortunately dragged you to irrecoverable lose, then you will be panic. A panic mind can not take a matured decision ever. It pushes you to more gutters and the results will be total destruction.

Please read my post regarding this subject on the link below.

http://www.stockinfos.in/2009/11/patience-pays.html

Patience will pay well in almost every facet of life. The calm but cautious waiting for a desired result is an essential quality for every human being/investor. Rectifying a decision in certain point of time is also a better habit than sticking on the dismals.

Never be in emotions. Refer Para 7-8 of my post at the following link

http://www.stockinfos.in/2009/03/investment-strategy-my-selected-seventy.html

In addition, once you have bought a share and exited with desired gains. The stock may go further higher levels. Never feel desperate as you lost further gains. And it is more harmful to acquire those stocks in higher levels. On the other side, some stocks may go down after your buys. If you have made the decision to buy that stock after an exhaustive homework, don’t worry about temporary fluctuations. But you should try to find out the reasons to reach proper decisions.

Thats all for now. We will discuss more on the topic in future…


Regards & Happy investing

Shabu Thachat - sthachat@gmail.com

Sunday, January 17, 2010

Do it now!

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Dear Readers,

As I said in one of the previous posts, a decision to invest in selected Indian equities will be a milestone in your investment life because India has such a rock-solid pedestal to compound your money in coming 5-10 years. In better words, such a decision or putting your money (cautiously) in Indian market will change not only your life but of the generations to come.

The whole world is anxiously monitoring the growth magnitude of China and India, the powerful BRIC duos. I am not feeling any sense of surprise in the growth of China because they are better disciplined in every facet. They are moving on a strict and closely controlled path of growth where decision making & strategies are in the hands of permanent people, Government or ruling Party. The concept discipline will work well in almost everywhere for a handful period and I believe that’s the fundamental platform of China’s growth chronicle.


When we talk about India, I believe, we have achieved much more than China in the midst of a constraint and complex scenario of democracy. Here, decision makers are assigned for just five years, very stunted period to plan/execute solid projects with long term vision/dynamics. Even, that time frame is not assured for them. Economical policies are entirely contrary between players/possible rulers. Most of the time, we are unable to even select a single party/team to rule us with clean majority. The annoyed Red Tapeism is another greatest real-time practical barrier and demoralizing factor to the entrepreneurial community. The list of constrictions are lengthy, but we are still growing in a fast pace! Is it not incredible? I am realizing the term “Incredible India” mostly in this point of view because our growth model is incredibly unique and exceptional.

Coming to the point, if I start to type the known statistics, this article will insufficient to explain about our growth forecasts. But still I wish to do that in bits. Broadly, 30-35% of our population will going to participate in the equity market, directly or indirectly with in the coming 5-10 years where the percentage stands now is just below 2. More than 100 Indian companies have US $1 bn market Cap now, will boost to 300-400 with in the time frame. About 1100 Indian companies are enjoying FII investments now, will precede to 1800-2000 by 2020. Around 135 Fortune 500 companies have R&D facilities in India will hike to > 300. These figures are continuously hiking in a fast pace. What else you need to put your faith in our market? or to invest in our own terra firma?

If you are not yet started investing in equities, you will soon be... And I am sure; every one of you must do that, if not now, later with the crowd. I wish to converse certain basics related to Stock market investment for the non-equity investing community. Following lines are again intended to freshers or who plans to invest in equities considering the above facts. Check the links concerned will aid you better.

It is better if you have basic knowledge on market concepts or you should be a bit familiar with this contour before stepping to invest in shares. You must achieve basic awareness from any sources, if you are serious to invest in equities. I am not talking about investment/trading tips from unreliable sources, rather the general knowledge including technical terminologies related to market.

The website http://www.investopedia.com/ especially the following sub-links may help you in a great manner in this purpose.

http://www.investopedia.com/university/buildingblocks.asp
http://www.investopedia.com/university/
http://www.investopedia.com/dictionary/default.asp
http://www.investopedia.com/search/searchresults.aspx?q=stock%20picking

You can dig knowledge as much from this site depend on your passion. The subject specific links will guide you to a wonderful world of equity market jargon.

Further, let us see, how we set up investment in shares. A PAN card is essential to invest in shares. You should have a PAN (Permanent Account Number) card to invest in any form of equities or attaining a PAN issued by Income Tax Department is a mandatory to every kind of investment related to equities. If you don’t have one so far, you can apply for that through an agent with a photocopy of your election ID Card, Address proof, and Photographs with less than Rs.100/-. It takes normally 10-15 days to attain the PAN after your application submitted. Fill the form correctly according to the instructions because it is your fiscal Identification which might have more significance in the days to come. You can learn more on the importance as well as statutory norms on PAN related issues at the link. http://www.tin-nsdl.com/

The first step is over. Now a demat/trading account required to start your investment. Check the link http://demataccount.com/ where you get a better idea on various issues related to the term. It is nothing but an account which keeps the shares you owns in electronic format. With a photocopy of PAN Card, Identity proofs, 2 Photographs with bank account details, you can approach any broker/sub broker to start a Demat/Trading account.


The next important step is to find a good broker who has a valid SEBI registration. There are hundreds of brokers and sub brokers existing but opt one or two who suits your requirements. I also wish to connect the phenomenon, “Increasing number of equity firms in India” to explore the unleashed potential of share market investments. Why share broking firms are budding in such a fastest pace? I would like to compare this trend with the previous IT boom era where thousands of IT companies launched to tap the theme of time. The growing numbers of financial firms are one another symptom or fidelity of our market prospective. They knows better the opportunities ahead and in effort to emit the maximum with the time ahead.

Study the brokerage structures on various trade types and decide the best one/two which suits you. The most important think is, try to find such a broker who values your hard earned money in all respects even if you are investing a very nominal amount. It is harder to find such one, but you have to find a team who cares you and your funds. Short list 3-4 best brokers after close research and discuss with their customers on the service aspects etc... It is also an important decision, how you are going to make buys and sells. If you are capable to do your own, then you are safe and it is the most decent way to invest.

Thats all for now. We will discuss some more on the topic later….

Comment please….


Shabu Thachat – sthachat@gmail.com

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Sunday, January 10, 2010

A Multibagger again...

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Dear friends,

I would like to recommend a scrip to readers as my gift on this new year 2010. My sense have already been diagnosed and decided this scrip to consider as a multibagger on the basis of their history as well as future growth prospects of the business model. This gem stock, I have already been recommended to my certain clients and most of them enjoying tremendous returns in a very short span of time. Hope they will comment their own about their experiences, gains and views. I am still confident on this company, it’s management and the business model they involved. Decide if you are convinced after a close scan on the following lines.

BSE Code - 532950
Scrip - Manjushree Technopack Ltd
Sector - Packaging (Plastic)
CMP - 52.55 (08/01/2010)
EPS - 6.60
PE - 7.96
BV - 43.88
FV - 10
52 Week L/H - 10.05/53.80
Buy Range - 40-55 (Accumulate in every falls before 55, reasonable in SIP manner even before 60)
Ever High post 2000 - 66.00(Feb 2008)
Market Cap - 71.21
MD - Vimal Kedia
Promoter’s holdings - 55%

Highlights

a) Recession proof - MTL kept an average of more than 60% growth in PAT (Last 7 quarters).

b) The fast changing and innovative packing trends from conventional to compact with unique styles.

c) The dominant client base including established FMCG/Pharma giants.

d) Stable demand on packaging products ahead.

e) The growing retail industry and increasing power of purchase.

f) Efficient Management.

Bangalore based plastic packaging major; Manjushree Technopack Ltd (MTL) is a public limited company, with over 25 years of packaging experience. MTL has build expertise in entire variety of nonflexible packaging solutions including PET Containers, Multilayer PP Containers and PET Preforms which make use of the European, Japanese and Canadian technologies.



The variety of plastic packaging products of MTL for domestic as well as exports caters leading players in evergreen FMCG, Pharma and Food Processing segments including giants like Unilever, GlaxoSmithkline, P&G, Cadbury and Nestle etc. MTL is providing packaging solutions for a vast range of products such as Confectioneries, Tea/Coffee, Personal Care products, Pharmaceuticals, Food products, Sales promotional stuffs, iced tea, Ready-to-drink beverages, Fruit juices, Jams, Ketchups, Mayonnaise, Sauces, Milk & Dairy products, Infant foods, Soups, Agro-chemicals, Gherkins, Aerated Beverages, Household cleaners, Pickles, Health Supplements, Mineral water, and liquors etc.

A rough calculation of my own says, I buys more than 8-12 products indirectly of Manjushree in a month. This observation is factual and, I have accumulated their empty containers to count, for this purpose for more than three months. Funny, but in worth… Now, what about you? Observe and comment.

The 200,000 sq ft. facility of MTL includes two high-tech production plants that comply with European Food-Grade Manufacturing Standards, a 'Class 10,000 Clean Room' (The Hygienic standard specified for pharmaceutical containers). The company is capable to produce anything from 5 ml to 15L in various neck sizes and designs, with a wide range of closures & sealing options. To the entrepreneurs.., go ahead free with your products/business, the packaging solutions are ready. I am not neglecting the proposals to a possible ban on plastic products, but it will take time, because we are in India.


The company has won Asia Star and India Star awards on various packaging designs and innovations. The major clients includes Coca Cola, Pepsi, Kraft, Hindustan Lever, Nestle, Britannia, Glaxo Smith Kline, Procter&Gamble, Tata, Goodricke Group, Cadbury, McLeod, Godrej, Nutrine, Orbit Wrigley`s, Perfetti, Wipro, Parry`s, Kellogg’s, Henkel, Pfizer, MTR, Heinz and several other leading players in FMCG/Pharma segment. Marketing offices at the major metros/cosmos including Mumbai, Chennai and Bangalore effectively coordinating and liaise with clients across the country.

Mr. Vimal Kedia, Managing Director, under his impressive leadership, Manjushree has grown from being just a plastic product company to the today’s muscular stature. He has been felicitated with the “Best Entrepreneur Award” from the President of India. The company has ranked amongst Top 500 SMEs (Small and Medium Enterprises) in “India’s 1st SME Top 500 Awards”.

My View on the scrip

I strongly believe, this company will do miracles for you in long term. The packaging sector has not been greatly affected by recession. In fact they have registered growth in most of the cases. Coca Cola and Pepsi have even registered about 30% growth in the peak recession era.

The overall packaging (Packing/styles/dimensions/labeling) is increasingly becoming a differentiator for products in every FMCG categories. As you aware, the sectors, FMCG, Pharma and Liquor has been growing at a consistent pace, and the packaging sector has a constant demand simultaneously. These industries will continue to drive the growth of packaging industry, and at the same time modern retail spectrum is growing at a fast pace. The entry of payers like Walmart, Spencer etc… will surely accelerate this growth as well as leading home players like Reliance & Birla. Many FMCG companies have changed their formats of packaging from ordinary paper boxes, metal and glass containers to a variety of fancy plastic containers (baby foods/nutrition drinks etc) with varied options of closure systems, labeling and decorations and the process is ongoing.

Let me tell the most solid and positive point which established my faith on this company. The branded and popular packaging styles/patterns of leading products can not be easily changeable/modifiable by manufacturers especially in case of Consumer goods, Pharma & Edibles. The recognized brand or goodwill concept of products in certain shapes which carved in our brains is not easily changeable. In essence, the shape of Junior Horlicks container is established in your kids’ brain, you will strive hard to convince him/her with another container as Junior Horlicks. In simple words, companies have to spend millions again to market an existing product in new pack, will they?



Plus, the ongoing fully automatic filling processes designed in compatible with existing container patterns may restrict companies from frequent changes in packing. Both the above reasons are specific to packaging industry and moreover I hope, it will keep the clients with MTL for long term which will ensure stable demand for their products.

Manjushree Technopack Ltd comes under a unique class in the sector in all respects and keeping a superior reputation in the field. Accumulate!..

We will talk about this scrip again ...after 3 years….

Comment please…

Shabu Thachat – sthachat@gmail.com




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Saturday, January 2, 2010

Welcome note - Year 2010

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Dear Readers,

First of all, wish you all a healthy, peaceful and prosperous new year 2010. Today, I wish to discuss on few virtues of equity investments as a welcome note to the new year, which may helpful for freshers or those who are planning to invest in equities.

One of the most thriving years in our investment life has departed. Sensex has crossed the 17500 level but closed a bit lower on December 31st 2009. It has gained the highest percentage gain in a single year ever since 1991 or in 18 years of history. And if we look at year 2009, closing figure of Sensex on Dec 31 2008 was 9647.31 and it has bunged at 17464.81 in Dec 2009. An 81% hike. Check your status, if you already an investor.


The year 2009 rewarded me as well as to my clients some excellent gains; moreover the year has taught me certain precious investment lessons which I appreciate more than the monetary gains. The year also answered practically to my little long-lasting confusions on the behavioral side of the market. I am passionate enough on year 2010 as an ordinary investor because I have been firmly experienced the big truth, `Market always give good opportunities to make money irrespective of Index figures’. Moreover, I hope the globally improved scenario subsequent to recession turmoil or India specific favorable circumstances may bring our market to higher levels in coming days. I hope, companies showing lose statements even now, will improve in coming months.

It is remarkable that India, our motherland stood as a concrete mast without any bruises in the recession blizzard. Our nation boldly faced the calamity and successfully fought and triumphed in the conflict, by arming with its pure internal potency, gathered by transparent and highly disciplined financial/banking set up. Our powerful banks, our leaders and our corporate community responded in a matured manner to the myriad repercussions of recession and I would like to say, they saved us. We have to be grateful to those souls too, who has shown the vision or dared to nationalize our banks decades back, implemented other solid financial regulations, which turned the real saviors.

The World has realized well that India is the most appealing equity market to invest. Check the FII figures, how much money they pumped to our market in recent past. Whatever the reason behind, a country which safeguarded itself in a sturdy way to a crucial phase must be a favorable corner to all kind of investors. Furthermore, a country that achieved a far better growth rate and managed its economy without much confusion in an ever crucial phase, increases the confidence on its financial strength. I think we were the people, who nowhere had a count except in the population figures or in the numbers of gods. But now the international community is compelled to count us, and I hope they will start count from us in near future.

Majority of common investors stay away from the share market because of fear or lack of knowledge. They hardly know a person who actually made money from the market. Most of them depends nominal 8-9% returns from Bank FDs or Post Office based investments which are safe with assured returns. But the gains are normally crushed by inflation, means the money is idle.


I said this much to persuade the point, investing in equities will be one of the best decisions in this New Year for any individual, as India has such a solid base to multiple your money. Thousands of new investors opening demat accounts every day, especially after the parliament elections/Govt formed with lucid majority. The recovery symptom from recession and other positive views on Indian growth story is continuously boosting the numbers of equity fans.

If we take the number of active demat accounts as a measurement to count share market investors (direct or indirect), we have some 1.60 cr demat accounts. If we pass up the numbers who have multiple accounts, still approximate 1.30 cr demat accounts are there. Instead of figuring more statistics, I wish to say, the current percentage status of equity investors in India is equivalent to the figures of United States in 1960s. Means, we have to travel much distance.

On the other side, never select stocks as your only investment options. Or never put your entire savings to stocks. It is a place where you can achieve unbelievable returns equally prone to irrecoverable destruction. I have placed below a rough equity allocation chart considering the age factor/risk tolerance level. You can have an idea about the approximate percentage allocation, consider for direct investment in shares. These are the nearest imaginary figures but you can choose better %age levels depend on your poise.

Age group -- Max allocation %age(equities)

18-30 -------- 70%

30-40-------- 50%

40-50-------- 40%

50-60-------- 30%

>60-------- <30%>

There are lots of investment options in front of you like Bank FDs, Debentures, ETFs, MFs, Properties, Bullions etc. Personally, I prefer stocks first and then bullions as the best options for now. I least prefers MFs or ULIPs because we enjoys the gains after a lot of filtering other than brokerages. It is better if you have the knowledge of basic concepts related to market or you are bit familiar with the market. The blind long term investment does not make any logic, if you don’t have a specified target, you should be very careful. As I said earlier, Investing directly in shares are riskier compare to other investment options. Because the market movement as well as share prices depends on various known or unknown factors such as political, financial/banking rules/regulations, Govt policies, Global economical issues, drastic wheather changes, agriculture productions natural calamities, terrorist activities wars/war like situations, etc… etc..

If you are not yet started investing in shares, you must start it in very near future, because the popularity of equity investing as well as it’s importance as an investment option is spreading in such a fast pace. We can see this trend of popularity or growth in increasing numbers of financial/brokerage firms. So, decide as earliest.

Invest time for wisdom prior you invest. You will never lose both…

Comment....

Shabu Thachat - sthachat@gmail.com

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Disclaimer

The blog is associated with information on Indian stock market and author’s investment view points on various emerging stocks/sectors. The contents discussed in this blog are purely my own personal opinion and in no case weigh it as any kind of recommendation for stock market investment. The sheer purpose of this blog is to educate the interested community on market related subjects based on my experience and I am, in no way, responsible for investment decisions based on the contents described in this blog.



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