Investment or Trading : How ?

Hi,

Welcome,

This one a compiled post bringing essence of two previous articles, publishing again on specific demand by few clients. In short, I have explained the minimum level of awareness we must have, before jumping for an Investment or Trading in “Equities”.

Thousands of investors are joining with the market at this high valuation through various channels whether Mutual funds, Stocks or any other Equity formats. Most of them are involved in Trading, some of them planning Short / Mid Term investment with high level of aspirations, but without clear perception. I would like to stress on some important points which may help you out in the long run.

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For Investors

The basic researches which lead us to making decision or select stocks to invest, demanding intense study which includes several factors.

Just think…did you ever hear directly or indirectly about the Company/Stock or about their Products/Services etc.., If you never heard… simply forget them..!

Even if you heard, still you need to investigate about the company before putting money on them, about their assets, liabilities, earnings, Promoters, Management, competitors, the nature of business, sale figures, the amount of debt etc.. etc.. You can find many of these information your own with various financial web sites including NSE/BSE sites.

If you have done your homework in a legitimate manner and you have some patience, you should be rewarded with unbelievable high returns. It is not much the conventional or practical way of investing that the majority adopts. But I believe in this system and it is proved as the best strategy in the long run.

Full or partial of the following factors should be considered while selecting each stock for Investment.

(a) The fundamentals

(b) Sales/Profit CAGRs

(c) The product trend and applicability issues

(d) The future scope of products/Services

(e) The Management

(f) Assets/Infrastructure of the Company

(g) Certifications and Awards

(h) Market Response

(j) Previous Products/Projects Performances

(k) Investor relations

(l) Dividend History

m) Promoter’s holding

n) Product/service demand

  

For Traders

The basic theory of demand and supply is the driving force which fluctuate the share prices. The propensity to boost in price of a share means augmented demand whether it is for short term or in long term. The long lasting demand of a stock depends on various factors, which we will discuss later. But for now, what all the factors which amplify the demand of a particular stock in short term? Simply, something is happened or happening behind the screen or certain positive news sparked on the company/scrip like any of the following:-

a) Positive Mergers, Acquisitions etc..

b) Positive company results.

c) Fresh and commendable orders bagged by the company.

d) Tie ups , collaborations with heavy players in the industry.

e) Significant Awards/recognitions/approvals/patents to the company or to their products.

f) Chairing of well known professionals/intellectuals to the board key posts or as Directors.

g) New or sensitive product launches.

h) Heavy insider buying or promoter’s accumulation from open market/Buy backs.

i) Heavy corporate Interventions/HNIs/MFs/Investor legends/other Financial services.

j) Sometimes, bad news on major competitors, :-)

k) Increasing of assets by the company.

l) Positive media reports/Survey/research results.

m) Dividend declarations.

n) Positive technology advancements in the sector.

o) Favorable Govt decisions/rules/stands to the industry.

p) Positive Industry growth charts/figures.

q) Baseless but temporary positive rumors.

r) Favorable court verdicts in disputes involved.

I have tried to include most of the reasons whatever I remembers right now, please suggest if I left anything.

What basically an intelligent Intraday / short term trader have to do is, grab such positive but genuine news threads  (in kind of listed above) as earliest or much before the public get aware,   and prepare the strategy. 

So, whether you go for a long term investment or for trading, you must do some homework prior… the homework done by the others, surely better for their homes especially in trading format. 

Merry X’Mas and Happy New Year.

Love 

Shabu 

Thinking on the Next Post under Penny Passion Series

Hi,


after a long span... thinking to continue the Penny Passion series...  few possible gems are around my eyes under deep thick dark water ... will share with you after few more deep swims ...

Before that.....  just read the following posts again:-

http://www.stockinfos.in/2009/04/penny-passion-part-i.html

http://www.stockinfos.in/2015/02/recall-penny-passion.html

shabu

A committed text... even delayed..

Hi...

Again... don't have to write much.. but thought to fulfill an offered commitment even delayed... someway, myself try to become habitual to sit and write something at this platform...

A post on  Manjushree Technopack Ltd at following link published on 10 January 2010 explaining my views on the company and it's potentials in my view points..

I wished and promised to talk again about this company after 3 years from the date of that post, and even mentioned that at the bottom of  page.. but not happened ... sorry ...its almost 5 years gone..

I request my readers to have a close read on the text under following link  again ... and please read  the then comments too...Now I feels.. no need to say anything more on this scrip.. almost 50 to 500.. and I am missing those few guys like  Mahesh, Madan , James, Jagdeesh etc.. who were active at the comment space with encouraging texts..

http://www.stockinfos.in/2010/01/multibagger-again.html


Warm regards
Shabu

Recall : The Penny Passion

Hi,

Welcome back to myself as well to friends who repeatedly asked me to get active in this space..

Not much prepared to write anything fruitful today, but to bring back my readers to the link of a previous post of April 11 2009 at bottom of this page.. Its almost 6 years passed and let us check whats going on with that content..

We discussed on 5 unknown penny scrips that day costs less than Rs. 5... in the Penny Passion Series

1. Western India Shipyard - Recommended Buy Range : Rs. 3 to 5
2. Evinix Accessories Ltd   - Recommended Buy Range : Rs. 1.5 to 3 
3. Marksans Pharma Ltd   - Recommended Buy Range : Rs. 4 to 5
4. Kitex GarmentsLtd        -  Recommended Buy Range : Rs. 3 to 5
5. Birla Cotsyn India Ltd   - Recommended Buy Range : Rs. 4 to 5

I am not fully satisfied with the outcome of  majority of these stocks connecting to my then thoughts about these companies,  Western India & Birla Cotsyn are still dragging and Evinix almost disappeared.. But the other two, Marksans and Kitex done wonderful job for myself as well for few my then clients and Its encouraging to work more on penny stocks... Just see Kitex ... 5 to 500+ in just 6 years.. 100 times...  and Marksans 5 to 65..  You will get rest all from the link of older post below:- 

http://www.stockinfos.in/2009/04/penny-passion-part-i.html

A must read at following link and it is very much worthy in our scenario who intended to play with penny stocks..

http://www.stockanalysisonline.com/search/label/Guest%20Articles


Warm regards & Happy investing ,,,
Shabu

MODI MADE MADISON MAD....

MODI MADE MADISON MAD...

The Historic Madison square speech of PM Narendra Modi .. Yes I feel the energy roaming around the venue,  the reason sharing this video .

..watch full and think on the developing atmosphere..worthy

thanks

Be a Business Man

Dear Readers,

The theme of this post is consequent to stare a comment on the previous article.  I am besieged by reading that comment, because if our youngsters grasp this message in it’s real depth, it will be a great defining moment in their life. I am talking about the greatest and simplest business in the world you can start with your small savings….Investment in equities.

A bit on my intention; a good part of my friend circle is youngsters; some of them are even 10-15 years younger than me and are from a variety of fields/status. There are students, working guys, executives, well educated but unemployed etc. etc, I always encourage them to have a Demat account irrespective of their job, family background, income sources or financial status. Few of them are convinced and on the track of investing even with small amounts. Here too, I wish to use this platform for the same purpose. Jump in to this business if you have dreams to fulfill. No need to spare heavy sum to invoke this business and you can start this at any point of time. We have already discussed the importance of investing in Indian scenario in various occasions.

As a foreword, I would like to place one of my most preferred quotes by the investor giant Warren Buffett.

Yes, I think this may be one of the most precious speech marks by the investor legend, but less discussed. By agreeing 100% with him, I wish to motivate our youngsters to kick off the said fabulous business opportunity as earliest. Investing in equities is a really profitable business if you do with utmost prudence. You are eligible in all respect to start this business, whether you are working for daily wages, student, executive, housewife, retired/to be retired person or whoever crossed the age of 18. No one will ask your academic backgrounds. You can start this business without any large capital funding. I wish to underline this point that any one of you can be a BUSINESSMAN without considering your financial status.

I wish to analyze the above quote in accordance with my stance. As Buffet said, you never have to move back and forth to manage this business. You will be totally free while doing this alluring business. You can manage all of your other activities with out any disruption from this side. The business is fully automated from the very first day you started it. Don’t get puzzled to arrange big premises, electric/water connections, hi-tech machinery or other facilities to launch this business. No TIN required, but a PAN only. No employees or highly paid managers required to watch over your business. All of these amenities have already been established on behalf of you and you are a virtual kind of boss. No need to calculate your daily profit and lose statements. Will avail you ready made by the people you assigned.

You are doing a business of businesses. You are not holding a single business rather participating in diverse of businesses. World class professionals are working hard for you round the clock. You can have stake in businesses of the richest Indians like Ambanis, Tata, Birla or MNCs or with high caliber young businessmen etc.. They are liable to preserve your money than you with extreme caution for the purpose of their own survival. They must be in constant efforts to make the maximum gains for themselves where you are one of the partners. In addition, you can participate in the so called Indian growth story by having stake in the Govt owned companies. Highly experienced Govt servants will toil for you. What else you need to accomplish your dreams?

Never compare the equity investment with any other category of investments like buying bullion or putting your money in fixed deposits etc. Rather, you have to feel or experience the pleasing business ownership ecstasy while holding shares of reputed conglomerates. You have to feel proud on holding 10 shares of a prosperous company than having 10 grams of gold as an investment, irrespective of its current value. You have to feel the contentment by seeing your own company’s products/services doing well in the bazaar.

The only required thing is a bit caution in selecting companies and the time you entered in the stock. The initial capital is none an issue as you can start even with Rs. 1000. You can buy few numbers of good stocks even for Rs.100. Is it impossible to spare such a small sum from your day-to-day expenditures?

Here, I wish to have support of one more precious quote in this line of Mr. Charles A Jaffe.

It's not your salary that makes you rich; it's your spending habits.
Let me put in plain words, a person who have an average daily income of Rs.500/- and an outflow of Rs.600/- will make things knotty and he will be in great trouble on the road. But if he successful to manage with in Rs.300 or 400/-, that makes big difference. The arithmetic is same whether you are getting Rs. 100000/- per day. Audit yourself and carve this simple logic to your brain that your salary or any other income will not make you well heeled until you have power on your expenditures.
On wrapping up this article, wish to have few words to the youngsters including teenagers. Try to start this wonderful business at the earliest. Try to spare a coin or currency of 1, 2, 5,10,20,50,100, 500 or 1000 frequently towards the account of the said business. Generally, youngsters wind up overspending on small stuffs like Tea, Coffee, snacks, Mobile phones, soft drinks, cigarettes, beverages, foods, tips, gifts, partying, romance etc.. These does not seems expensive at the times, but add up to a considerable amount over long run. I never suggest stopping all these, because these are the zest of the time and age. You have to practice every flavors of the seasons of life. But you can save a considerable amount by reducing all these because these stuffs are not comes under the category of life saving medicines. This money can be better used up on your above said business which might have changed your life for ever. Such an effortless caution may protect you from working till the age of 55-60 for a living with thicker goggles. You can implement few firm decisions now, as everyone realizes the value of money after it surpassed. In most of the cases, whatever the money you are getting now is much more than your current needs, don’t be panic to drain it out before the next salary date. It will not bite if you keep idle for few days rather it will comfort you in the long run. I have placed a link below; one of my initial posts may help you on the way of savings in day-to-day life.

http://www.stockinfos.in/2009/02/solidarity-victims-of-recession.html

Before concluding this post, I wish to review a wonderful chat session with a guy who is in my friend circle. He started investing a few years back and was talking on his future plans. He is working with a private firm and if my memory is correct he is at his 35-36. He wish to retire by the age of 45. He is planning not to work after 45 for a living. He is setting up his investment for the next 10 years and counting down the days. I asked, what will you do after that age? Will you stay idle? He said, “I wish to live full of life what all I missed till the time, wish to live peacefully with family and kids with out burden of job and all. Wish to engage in all favorite hobbies pending by years that couldn't fulfilled yet. He wish to spare more time for his kids, family etc.. Wish to indulge in his unfinished crazes like gardening, agriculture, farming, cooking etc... etc.. What a great thinking. I wish all the best to him and I know…He will!

Do you accept this equity investment as the most effortless business in the world?  I do!

I don’t think buffet said it as casual, It seems this quote holds the support of his experience gathered by decades.

comment please...

sthachat@gmail.com

Happy New Year

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Dear Readers

Accept my hearty wishes for a peaceful, healthy and prosperous new year 2012.

I wished to talk on something else as a gift post in this New Year, but changed mind after watching the following link. Keeping the entire adore to market, I wish to share, someway an incongruous observation by an intellectual Indian Guru.

        
http://www.youtube.com/watch?v=ogaeixO7kPY&feature=player_embedded

I would not like to comment on his words, but myself, watched several times, word to word, and  hope, it must  be  very special  to share with you  rather anything at this time....

Thank you Mahesh.....

Comment please....

Shabu Thachat

Stay cool ....

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Dear Readers,

There was a long gap in blog postings due to some personal issues and related change in schedules. I wished to complete this post even months back, but delayed to this point of time. Any way, will try on frequent interactions.

Lets talk on the ongoing phase of market. Most of our Portfolios are facing considerable loses at this juncture, especially those who started investment in last couple of years. Few of us burnt fingers by unloading entire holdings with serious loses. The second category exited well in advance at profit counters and sitting on good cash as well waiting to green the rest, the third, who are still accumulating in small batches as well averaging selected, but their trusted scrips at lower levels. All these groups are right with their own level of understandings and reasons.Transitory loses are a part of equity investment like always and its true that no one with out a history of mislay could survive the market.  But we required to adopt a positive attitude, need to prepare a confronting mood to loses for a credible recovery. Things are easy to say, but to implement a systematic but tough strategy mixed with extreme patience and dare is exasperating in practical, but not impossible.  There is no point of panic, if you have good faith on the stocks you are holding; even they crashed heavily in the current down turn. But ensure that, the crash is nothing related to stock/company specific issues. We must have to keep a higher level of  patience and sometimes it test us for long duration. Things will surely come bright with in few months and its inevitable in Indian scenario.

Markets always respond in an exaggerate manner to both moods, positive or negative. Some negative developments are there, but I feel, all these does not worth to create such an extreme panic stage especially in Indian scenario. There are no real frantic issues to feel upset on these entire crisscrosses. You can simply digest this point, if recall and analyze the history of our highly dynamic market for past couple of decades. Remember, it’s the same market which rocketed some 2000+ points in a single day after oath of the ongoing UPA Govt under Manmohan Singh. Market simply responded in a dazzling manner on a hollow but positive political news thread. And miserably, we know how things turned and how those so called optimistic rulers are ruling on us, harassing the public, testing our patience at their best.

Market’s positive responses to such spontaneous news were extreme and we need to consider the reverse too and is always hanging on indices. News on any kind of political instability, spurt of a war, unprecedented climate changes, serious terrorist activities or like ongoing global issues, or anything can create a deep sentiment and bring down the market to unexpected levels. But always the then sentiment, only sentiments reflects on indices. People, especially who falls under the trading fraternity practices drastic sells or buys in response to initial but overstated news threads by media with out absorbing/analyzing the reality.  And every time, people who responds in panic, burns their fingers. I strongly believe, nothing happened other than emotions, my point is, no matter of panic, except some temporary emotional concerns driven by media.

Substandard symptoms on global financial indicators especially related to Europe & US as well their serious debt issues are the visible aspects for the current down turn.  RBI’s certain maintenance activities adding fuels at times and like always, the factors works on indices rather than facts.  The unquestionable US economy and few Europeans are under big question marks and fading their charm. The so called muscular US economy is suffering serious internal injuries and struggling for survival. The European scenario is also not promising with countries like Spain, Italy and Greece.   The emotional impact is spreading gradually and reflecting on world wide key indices. DOW downed some 5.5% in a single day in a moaning Monday of August 8. Some European indices crashed more than 20% and keeping the downward trend, Indian market and our BRIC mates also lost around 15-20% at their key indices and moving directionless.  And recently the Occupy Wall Street movement is got fired and spreading its arms. 

 
We can have a sincere look back on the previous slowdown era and can analyze the reasons with simple lay-man logic. Considering the US, Japan & Europian issues, the so called recovery symptoms were mostly fabricated. It was something like, a heavily damaged vehicle made ready to run forcibly with poor techniques. The interesting fact is, nothing less than an overhaul can run those vehicles again. This time it is irrecoverable for them, especially for US, Japan & few Europeans. The ongoing weakness in the labor market, low economic growth and untenable amount of debts are high degree concerns. It seems, all the above economies may possibly stay in poor health at least for next 3-4 years, even if they succeeded in managing curative measures. Simply, the recovery will take considerable time to reinstate things. That’s too, if everything, the counteractive measures worked out on a deliberated and disciplined manner. Recovering from such financial concerns are time consuming and there is no short cuts other than media hype, what they practiced last time.  The damage of the vehicle was not really solved, now it demands nothing less than a full fledge overhauling and it will take considerable time.

It seems, a credible set up is developing to rationalize the positions of those so called inflatable financial powers. Yes, countries have real inner strength will come forward, and we are there at a significant position.  Keep in mind that, all these market disorders are hardly related to any Indian standards or concerns on its growth measures, but purely external. Its true, we have unrivaled negatives, like heavily corrupted politicians, uncontrollable population, political instabilities at times, frequent terrorist outcomes, alarming inflation figures, disturbing interest rates and related qualms, but our economy is still intact and at an emerging phase.  In other words, India is not going to face a slowdown, but side effects rather than serious infection. Remember, the side effects must reflect on indices for the interim.

I would like to alert you all, who searching the bottom or confused on an entry point, the bottom level is unpredictable like always and investors who jump with big figures influenced on amid sucker rallies will surely burn their fingers. Its the history and tendency of every bear season. Be vigilant, searching the bottom of any bear market is a worthless effort. It always swallow as much traders/investors in its mouth with alluring short term recoveries making them feels a come up of  new  bull season…Bear market works like a defunct rat trap, which can shut we rats  in full or sometimes partially. Waiting the right opportunity to get out once the shutter relaxes, staying idle for a full opening or get out with cuts and bruises….

Comment please .... Happy investing & regards ....

Solidarity to Anna - The real Soldier

Dear Readers,

I would like to express solidarity to that great human being of our times,  Shri Anna Hazare, through this platform and his movement  against corruption as well for implementation of a genuine and powerful Lokpal Bill. 

It seems the movement may turn very much positive especially  for a country like India. Our highly corrupted politicians already lost their sleep, they are under nightmare and will!!

I am bit confused on the current abusing trend by congress Govt to Hazare in personal. These are the people who honored him  with Padmashri in 1990, Padmabhushan in 1992, SHIROMANI AWARD 1996, NATIONAL INTERGRATION AWARD in 1999 and much more in  last couple of decades. And, most of the times there was a congress lead coalition Govt. How such a highly favorable person can turn not only unfavorable but an enemy within such a short period? Is there any real logic… ? We know…..

I would like to request you all to express the solidarity to his movement in the real means ... and comment please

regards

Shabu Thachat

A must read content..

Dear Readers,

I wish everyone of you have a close read, an article by Prashant Jain(HDFC-AMC), forwarded by one my friend Mahesh Pidshetti from Bangalore..

http://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=1EwnJp7HcxkFptBzMkF-AiVU5JLlVkj0evNDO6n8ic3DNPyvP5YqKSip__6o-&hl=en_US


regards
Shabu Thachat

Multibagger Series - a cooling stock

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Dear Readers,

Markets are witnessing outrageous bleeding on collective sentiments related to various national and international issues. Some good stocks even fell more than 50% from their year high and offering a wonderful opportunity for patient investors. But considering the dense of ongoing negative pulses and associated sentiments, we should be very careful on any investment decisions related to equities. I hope market may provide better discounts in recent future, probably with in the first half of year. There are no visible serious fret factors for long term investors and whatever happening is a cycle of provisional actions, based on sentiments derived from series of negative cues.

It seems the level of crashes were not corresponding to the depth of sentiments or its at the lesser side. The overall impacts on the recent series of negative reports were strong enough to bring our indices down to some 25-30% but it was just below 20%. Even after a flood of negative issues and unparallel corruption revelations in the recent past, people are still buying our stocks and keeping faith on the market, FII's are still pouring money to our market even smaller in size. Remember, there is a buy for every sell. Just list out the chain of scary issues occurred in last couple of months; Alarming figures on inflation, negative IIP data, negative bank rates, increasing fuel price, spreading middle east anarchy, gigantic corruption revelations including Adarsh Flat, commonwealth games, 2G Spectrum, S-Band, harassing Radia tapes and now the obscurity raised by DMK on Govt’s existence..

There is some sure and different charm exists with our market/economy; otherwise the above reasons were more than enough to bring our indices to another historic lows. But there is some stubborn strength is underlying somewhere with our economy. The main pillars are still strong, which affirms my confidence or makes me more positive on our market. Market is really struggling to regain the charm, I would like to suggest you all, keep your faith on good companies headed by genuine management, which will surely bestow you good returns in the long run. Putting entire money in few stocks or having big numbers in certain stocks at a go, will not exactly the smart side in view of the ongoing scenario. This tact may prove hazardous considering the dynamic response of market to even trivial negative news threads. Accumulation in small batches at possible lower levels, the only strategy which will be beneficial or at the safer side in future. Because market is started responding quicker than ever and like anything corresponding to the tempo of our times.

I would like to place few inputs on an outstanding company as promised earlier. First of all, let me thank to Mr Mahesh, Bangalore, who grabbed my attention to this company in last year, reminded as well encouraged me to talk on the scrip. After a close scrutiny, I hope this company can provide superior returns in the long run for patient investors. Myself, already been analyzed and firm to consider it as a multibagger on the basis of differentiation and sensible monopoly in the segment. Moreover, I am confident on this company and the products/services they are configuring as an essential service to the vibrant Power/Energy/Oil sectors. Subsequent lines are plain personal conclusions, compilations or convictions to have this stock, I am satisfied with the horizon developing by this company considering the available data and feels the path ahead is promising. I have good faith on this company, their business model as well on its proficient management.

BSE Code - 530743

Scrip - GEI Industrial Systems Ltd

CMP – 170.55 (07/03/2011)

EPS – 15.34

PE – 11.12

BV – 52.57

FV - 10

52 Week L/H – 91.10/238.90

Promoter’s holdings – 41.41%

Chairman/MD – Mr. C E Fernandes

GEI Industrial Systems Ltd, an ISO 9001-2000 certified company with ASME’ "U" Stamp engaged in design, engineering, manufacturing, installation, commissioning and maintenance of extended surface heat transfer technology mainly for Power, Oil and Gas industries. The company is specialized in Heat Transfer Technology, an obligatory element for entire engineering processes irrespective of nature and size. It offers a wide range of equipments/installations including air cooled vacuum steam condensers, air cooled heat exchangers, process gas coolers, cooling water systems, transformer oil coolers etc. The company provides its products/services to a vast range of engineering installations such as power plants, crude oil/Petroleum refineries, CNG/LNG terminals, petrochemical/chemical plants, Oil and Gas fields, off shore gas processing platforms, fertilizer plants, metallurgical industry, electrical locomotives, cement plants, Sugar industry etc.

GEI have clear domination in the segment as well there is no Indian or listed Indian entities as competitors except a couple of foreign players. The company holding a market share of 45% in Air Cooled Heat Exchangers in the Oil & Gas Sector and about 70% in the Power segment. It has an admirable track record in the Oil, Gas and Power sector installations in both American continents, Europe, Africa, Asia and Australia. GEI has also entered into marketing agreement with X-Wire, an American company, to tap the US market and to meet up its outsourcing requirements in the heat exchange platform. GEI is also engaged as a major contractor to the massive Rural Electrification schemes of Govt. of India, targeting electrification of more than 1 lakh villages in different provinces of our nation, to be completed over the next 3-4 years.

GEI having the essential expertise and proved experience in the air cooling space is likely to be the key advantage to their rising demand. The conventional water cooling system depends on constant water availability and the paucity of water is the main obstacle for cooling processes at certain engineering sites. Water shortage has been detected as one of the prime reasons for many recent disorders/shutdowns in power plants all over India. GEI’s indigenously designed air-cooling concept work on freely available air, instead of diminishing water for cooling processes.

In a survey of India’s water situation, about 21 million wells drilled are lowering water levels in most of the country. In North Gujarat, the water level is falling by 6 meters (20 feet) per year. In Tamil Nadu, wells are drying almost everywhere and falling water tables have dried up 95% of the wells owned by small farmers. And the story is same or more worsen in other states. You can estimate the future business potential of this company by connecting the above stunning facts on water scarcity; moreover 70% of our planned power additions are setting up in water-scarce areas. The company will surely benefits from the rising demand for its air-based cooling systems from power/energy and petroleum industries, since accessibility of water is drastically retreats. In India, these two industries are highly reliant on water for their cooling requirements and are facing operational troubles at times when sufficient water is not available.

GEI is prepared to gain from the anticipated massive power projects by providing air-cooled solutions that offers remarkable benefits over conventional water-cooling systems. The company is undergoing a 100cr expansion plan, which will greatly enhance its capacity by end of this year. The expansion will allow GEI to double it’s order intake capacity to Rs. 1000cr from the current 500-600cr levels. It is estimated that, on the completion of proposed expansion plan, the company will emerge as one of the top three players in the segment globally.

Any threat of new entries in the segment is limited because the entries in such businesses are purely related to proved expertise/experience. Conglomerates who make considerable investments on large projects must verify the technical expertise, competence and capability on prompt deliveries from the partner. I don’t feel any fresh player’s entry as a threat in recent future, because the experience or past performance is appreciated largely in such service segments and that’s the lone eligibility condition to adopt such a partner. Normally, our power players will hardly try their luck with any newbie in the sector to play on their huge investments. .

There will be a huge investment in the power transmission and distribution area which is estimated to be around Rs. 4500 bn .Considering the vast prospective in this field, GEI has also stepped in to the power transmission business. A separate group, GEI- Power Transmission Business Group has been shaped in the company itself and experts in these fields have been recruited recently. The company also prepared to enter in to the area of Power Generator components, heavy fabrication and machining of generator components etc. GEI is planning to expand this potential business to the tune of around Rs. 2.5bn by next 3-4 years.

The dominant client base including established players and the probable demand on their products/services are indicating a clear horizon for the company in the future. I have listed few selected domestic and international players who are constantly getting cooled by GEI:-

ABB Ltd
Bharat Oman Refineries Ltd
Bharat Pumps and Compressors
BHEL
BPCL
Cairn India Ltd
Chennai Petroleum Corporation Ltd
Crompton Greaves Ltd
Davy Power Gas
Dresser Rand, USA
Engineers India Ltd
Essar Oil Ltd
G.S. Engineering, Dubai
General Electric, USA
Hanover Middle East, Oman
HPCL
IOC
IPCL
Kirloskar Pneumatics Co. Ltd
Larsen & Toubro Ltd
MRPL
ONGC
Oil India Ltd
Oman Refinery Co, Oman
Petronet LNG Ltd
Punj Lloyd Ltd
Reliance Industries Ltd
Samsung Engineering Co. Ltd
Sarda Energy
Shell LNG
Shree Cement Ltd
Shree Renuka Sugar
Solar Turbine, USA
Sri Ram EPC
Tata Electric Co. Ltd
Tharmax India Ltd
Thyssen Krupp
Toyo Engineering
Transturbo Engineering Sdn Bhd, Malaysia
Veco Engineering, Abudhabi
Walchandnagar Industries

The company also grown in a consistent manner, profits in the past 5 years grew at a CAGR of around 50%. I would not like to talk much on the technical side as it is easily available. With the outstanding track record in engineering expertise, manufacturing capacity, product innovation and global cost competitiveness, GEI remains solid to work out the best business with in the sphere.

Let me conclude, the majority is confident on the power sector and its a fact that power/energy is one of the most demanding business of the time. Ample funds have been committed by Govt as well private players in the Power/Energy sector as its the key to economic growth of any developing nation. A rough statistics, India is likely to commission 50000MW in the 11th 5 year plan and an anticipated 100000MW in the 12th Plan. Its sure that, increased investment in the Power & Oil sector by the Govt as well private players will provide enormous business opportunities to the company. I think, it will be a wise decision to accumulate GEI in small batches, who cools the head of power/energy/oil sectors, it will surely cool us too in the long run.

Comment please…..

Regards

Shabu Thachat – sthachat@gmail.com

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Sensex – The sensational story

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One of the most promising decades in terms of equities has been flagged-off. Its my first post in this new year and I would like to wish you all the very best in this year. In continuation with the previous post, lets talk on one our robust Indices, the BSE Sensitive Index (Sensex).

Bombay Stock Exchange is the oldest stock exchange in Asia and it is considered as the theoretical mercury of Indian economy/market on which majority of traders/investors designs their trading strategies or in other words, the pedestal of their investment decisions.

History highlights

The BSE (Bombay Stock Exchange) was established as `The Native Share & Stock Brokers Association' in 1875. Its all started when some 22 stockbrokers commenced trading under a tree opposite the Mumbai Town Hall in mid 1850s with an investment of just Re. 1 each, a substantial amount at that time. Premchand Roychand was the top broker of that time who assisted in creation of procedures for the trading system. Several stock broking firms in Mumbai were family run enterprises at the time such as Jamnadas Morarjee, D.S. Prabhudas & Company, Champaklal Devidas, and Brijmohan Laxminarayan. etc.. Few of them still managing their broking businesses. The Government of India recognized the Bombay Stock Exchange as the first stock exchange in the country under the Securities Contracts Regulation Act -1956.

The BSE Sensex was initially composed in April 1979 with some 30 stocks in various sectors. The BSE trading platform enhanced by adopting the computer based electronic-trading system in 1995 and currently it has more than 5000 active listed entities and its the largest in case of number of participants in a single stock exchange. India’s economy is comprehensively reflected on the rise of the Sensex and it is one of the dominant markets in Asia. In 1990, Sensex has crossed the 1000 point mark, was an Indian detonation aligned with the global markets reformation. Year 1990 was a historical year for the BSE Sensex.

Thrilling twenty years

On July 25 1990, the Sensex touched the exciting four-digit figure for the first time and closed at 1,001. It was one of the milestones for Indian equity market as well economy which never looked back from that point. Since, the upward trend of BSE Sensex is one of the steadiest compared to other overseas markets/indices and it will be interesting to observe the wonderful story of Sensex. I have placed few statistics on BSE Sensex since the year 1990 and the probable arithmetical conclusions left on you.

Sensex has shown an average yearly hike of 588 points in five years since 1991 (1991-1995).

Sensex has shown an average yearly hike of 441 points in five years since 1996 (1996-2000).

Sensex has shown an average yearly hike of 658 points in five years since 2001 (2001-2005).

Sensex has shown an average yearly hike of 2333 points in five years since 2006 (2006-2010).

2011 - 2015?

Sensex has shown an average yearly hike of 515 points in ten years since 1991 (1991-2000).

Sensex has shown an average yearly hike of 1496 points in ten years since 2001 (2001-2010).

2011 - 2020?

Sensex has made an average yearly hike of 1000 points in last 20 years since 1991 (1991-2010)

Sensex was never made a negative YoY difference on year high after 2002 except in 2009 which were totally based on the recession, truly an external factor.

Sensex took almost 16 flat years to touch the first 10000 levels (25 Jul 1990 to 07 Feb 2006, check the table). Interestingly it has grabbed the next 10000 points with in just 1 year and 8 months (07 Feb 2006 to 29 Oct 2007). The villain is same recession.

More precisely, reaching the first 5000 points since 1990, took some 9 years, next 5000 mark crossed in 7 years and the next both 5000s are in just 1 year intervals. Is that amazing? I strongly believe the recession played the foul, otherwise?

If we take last 20 years of history as a base, simply the Sensex have to reach some 30000 level by end of this decade. But remember, the ongoing trend as well other sustaining growth factors are much supportive than initial 10-15 years. Watch the figures of recent years.

What you think? How many more years to take for the 30000 levels considering the trends? Another 10, 4, 2, 1 or less?.

I have placed a couple of screenshots above in which you can read much more than what I have typed here. Anyway, raising questions and finding answers in contrast with the history is left on you. But I am sure India will stamp its authority in the global economic scenario by this decade. India being diverse in many sectors will see more upside due to the strong demand from its correlated sectors and it’s the most appealing destination for the investors worldwide.

A New Year gift post in the multibagger series is pending and I am working on that, will publish very soon.

A great quote is worthy here to mention; "If past history was all there was to the game, the richest people would be librarians - Warren Buffett

Comment please......

Happy investing & Regards

Shabu Thachat – sthachat@gmail.com

Happiest ever decade !!!

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Dear Readers,

Another excellent year and a remarkable decade are departing. I wish you all a merry X-mas and a prosperous new year in advance, moreover wishing you the happiest ever decade ahead in your investment life. Investing in carefully selected Indian equities, taking part even at the current levels will be one of the consummate decisions for you in this New Year. Because India and its market is developing such an outstanding base of opulence to multiple your money in coming years.

Money simply doesn’t make money in the market. Money, even a small portion, with a better level of awareness will surely help you to achieve your goals. Internet, the largest and fastest knowledge base is in front of us at the cheapest cost. Today, knowledge is at our finger tips or we can unearth any information with in seconds. I think, its obligatory to keep up-to-date ourselves before any kind of investment decisions, especially in the current scenario. I personally know people who lost more than 50% as well gained more than 150% in the recent course of Sensex’s 9000-21000 rambles. So, wisdom matters. The awareness or reasonable understanding on your stock selections worthier than anything and it’s the most important point you have to carve on your brain at this New Year.

Stocks discussed a lot by media or experts may not beneficial for you always and generally they burn your fingers. You have to develop a reasonable decision making strategy considering the news and it’s probable impact on the share prices. Never ignore technicals, as these figures will give you an insight on the way how the company is performing. But you have to focus on the probable demand of the product/service offers by the company or weigh, how it can turn vibrant in the future.

I think, short term trading will be more hazardous in the days to come because of rising contribution of fastest communication means like internet/Mobile phones etc... And the increasing number of market participants as well high scale of volatility on indices will compel you to be faster than anyone. I know people who trade everyday as a routine and some others trades once in a while or so. The second category reacts only to accurate news thread after confirmation on the source and correctness of the information. Interestingly they are even ready to wait weeks for such a suitable event.

I am equally passionate on launch of this new decade with the previous extreme lows of market, where we had enough to hope. Its again the time is arrived to fill your bags with good scrips in small batches with an ownership mood. Its sure, the span of next 10 years or coming decade will reshape the face of our great nation and I would like to invite you all, to participate in this excellent journey and to grab your own portions.

Even after all the ongoing anarchies, I am keeping 100% confidence on our scenario and there is hardly anything visible ahead which enough to deviate my morale. Yes, further unbelievable corruption revelations might have there in future, but personally I am positive to all those processes. Cyclic refinement is one of nature’s unquestionable practices or we can take it as, cutting down certain weak or overgrown branches will surely boost the growth of core trunk.

The coming New Year and decade is one of the rarest occasions to us and I would like to stress on that point. It’s a time to forget all the failures and to adopt a cognizant and calculated strategy with a long term vision. Forget all the bitter experiences and look for a bright future ahead stepping with our promising financial system. Just focus on the size and power of one of the world’s most persuasive purchasing/consuming band of population. I think, the single reason is enough to up keep the trust on our economy.

Naughtily, I am keeping an inflated wish or it may be a cycle of economics. A recession born from us (not from US) on any possible grounds at a certain point of time in future, may be after some 10-15 years, which will trembles the global economy, like what we suffered of late. I am totally not interested to consider anything negative on our growth course prior that possible threat.

If you are an investor with long term vision, don’t bother much on Index figures or on its temporary wavering. An easy target for Sensex’s 30,000 is there with in a short span of time. A new journey for the market has begun few months back which might have take it to much higher levels over the next few years. Probably 35-40k levels over next 5-7 years is imaginable and I strongly believe its attainable.

The above statement is clearly not a prediction, but I am compelled to believe like after a close watch on the Sensex’s history of past couple of decades. I would like to place some interesting statistics on Sensex to convince you the possibilities of above said figures at my next post. Hope, it may help you to get convinced on the trend of overall growth trajectory of Indian market and relevant future figures too.

Before that, I wish every one of you have read the pages at following link, what people thinking on us.

http://www.ibef.org/resource/quotes.aspx

Once again, Wishing you and family a Happy and prosperous year ahead filled with peace, joy and wealth as well welcome all those who joined in the Portfolio Advisory Services in the month of Dec.

Comment please...

Shabu Thachat – sthachat@gmail.com

Alert on Parekh

Dear Readers,

Please refer the SEBI order at following link and have a full read with patience, Its informative.

http://www.sebi.gov.in/cmorder/SanjayDangi.pdf

SEBI has banned promoters and promoters group of certain companies on further buy/sell in their own companies cause of some violations of rules/regulations noticed. The name of the companies revealed in the above order is nothing related to us, but name of one entity who is under suspicion, Pacific Corporate Services Ltd has considerable stake in Parekh Aluminex. (Check the following link)

http://www.equityintelligence.com/profile/ShareHPMoreOne.aspx?code=7902

Parekh Aluminex has already crashed by almost 20% (LC) on yesterday (03 December 2010) by when the news spread and I hope the blind sentiment may bring down the stock bit more. There is nothing fundamentally changed with the company/stock/business but there is a chance of possible illegal trades might have revealed in the future on Parekh Aluminex too by Sanjay Dangi group or Pacific people.

I hope its better to exit from Parekh Aluminex, whether lose or profit. Another possible strategy can be take out the Capital or Profit which ever is greater. The stock is fundamentally strong and we can think a re-entry at lower levels once the issues settled.

Check the following link too on revealed insiders...

http://www.moneylife.in/article/72/12111.html

regards

Shabu Thachat – sthachat@gmail.com

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Scam season – the endless story

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We are in earshot of multi-crore scams and scandals involved by our Honourable Ministers, politicians, senior Govt servants, corporate negotiators, media icons and other top class officials. Filthy CWG scam, outrageous 2G Spectrum deals, greedy loan scams headed by officials of India’s Largest Home lenders LIC Housing finance, escorted by reputed PSU bank officials of Bank of India, Central Bank, Punjab National Bank etc..etc.

The amounts involved in such scams/scandals are proportionately increasing like the prices of Sugar, Onion or Gold. Money is becoming valueless. I remember the days; 1Kg Sugar was less than Rs.1.50/-, Onion at less than Re. 1/Kg and Gold was less than Rs. 100/Gm. The then scams were limited too with in thousands or lakhs keeping the ratios. Now we have grown, paying 20-40 times higher for above stuffs. The proportion of sums involved in scams are more attractive and may be its the reason, majority is interested in fiddling than anything.

Negative global developments including Irish reactions, Korean build-ups and finally serious wikileaks paranoia are adding the fuel. The Korean and probable revelations from wikileaks are more serious than anything. My assumptions may be wrong, but I am anxious because, US is playing at both the faces, they even took official advance bail on the wikileaks revelations by alerting us, you don’t believe all these.

The investor fraternity is in negative sentiment and its reflecting in the market as usual. Market has corrected almost 10% since the recent peak on 5 November 2010 due to a blend of international and India specific issues and is gradually recovering. There is no vaccine to cure the corruption plague. It was there in our blood, it is there and it will be!. We have keep roared as much with the media whenever we noticed such dirty practices. Media, the people we trusted or leaned on all these times, who shared our pain and enlighten our wishes each time we hassled by scams/scandals/politicians. They are also leaving us by realizing that they can make much more than what they earn by strolling within the four walls of channel studios. They too, finally found the alluring outside world which provides huge opportunities. If the revealed tapes are correct, its highly harassing. I could not yet convinced my sense up on the rolls played by our reputed media idols, especially Padma Shri Barkha Dutt. Recall her Kargil & Mumbai attack reporting, and the Padma Shri, our fourth highest civilian honour is still with her name. Won't we respect that class civilian decoration or we disregarding the others who awarded it?

Lets come back. Crashes and booms are common phenomenon towards every market and economy. I think whatever going on is simply related to sentiments and the economy is intact in our case. Such types of scams/scandals were there with every emerging economies and history denotes the same. Its our good luck that things revealed even lately because we are in a democratic structure. As investors, we should not be paranoid on such temporary sentiments but its wise to be very aware and cautious on such developments. Whatever going on is just a psychological extract and I don’t feel any big thrust on such issues. I am happy that, finally we got to know all these, God is with us and we are skilled or immunized to absorb all these shocking deeds with a cool sense. I think its an opportunity for our politicians for self realization as well thinking on remedies. From our part, we can only pray for some kind of Wikileaks exclusively for Indians and it will provide us some more interesting times with the market, moreover we always need some kicks to walk straight.

Market is a place where investors should prepare for the worst always and expect the unexpected. We have to be firm in such testing periods because we are strong enough. We are one of the fastest recovered markets from the recent historic downturn and there is hardly anything hazardous ahead. In the recent tweak, some sectors and stocks have corrected much more than the main stream because of certain sector specific bad news related to telecom, infrastructure, realty and banking etc... The valuations have turned more reasonable for certain scrips and those who unreasonably punished will recover fast.

regards

Shabu Thachat - sthachat@gmail.com

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