COGITO ERGO SUM
Tuesday, July 8, 2008
Thursday, July 3, 2008
Post titleBollinger Band Tactics here...
Bollinger Band Tactics
by Alan Farley
Bollinger Bands draw their power through two important characteristics. First, they exhibit an underlying trend-range axis just like price or moving averages. Second, they constrict or expand as they move. The interaction between these two forces draws unique patterns as bars unwind through its boundaries. Candlesticks work especially well with bands. For example, a Doji that strikes through a constricting band effectively signals a short-term reversal.
BBs bend and twist in response to price movement. These undulations predict how far trends should stretch before central tendency forces them back toward a central axis. Complex relationships develop between price-band direction and price-band constriction. For example, a trend tends to pause when constricting bands oppose it. It takes great skill to predict the bands' ultimate impact on price but is well worth the effort. More than any other tool, BBs pinpoint hidden swings and telegraph whether the profit door lies open or closed.
Bands may swing through relative highs or lows and then pull back into proportional retracement to start another trend thrust. Or they can enter extended ranges that meander back and forth without direction. Movement frequently stops dead in its tracks when price rises into a falling band or drops into a rising one. Sideways bands can appear in both rangebound and trending markets. Price often fails to reach new high or low territory until bands expand to clear the path. In many ways, Bollinger Bands predict time better than they predict price.
Buy Signal
The top Bollinger Band rises toward a test of the intraday high as Worldcom drops. This sharp divergence signals the eventual breakout after price finally reverses off of the bottom band. Watch band slope closely when bars return to test important highs or lows. It often reveals the time and force needed to push price through a S/R barrier.
Bollinger Bands buy signal
The skilled eye watches constricted bands in real-time to estimate the buying or selling force required to push them out of the way. They work extremely well during the second test of an important high or low. When markets finally break out, expanding bars often shoot into the band's edge where congestion forms a flag until the BB allows further movement. Bands constrict tightly around narrowing price in sideways markets. Apply NR7 methodology here to anticipate an impending positive feedback event.
Bollinger Bands signal early warning of trend change. Sharp price movement forces bands to expand outward. When these active markets finally turn sideways, the bands slowly tighten and roll toward price. Time passes and the BB door closes on rapid vertical movement. Experience enables the swing trader to quickly estimate the time required before bands will tighten and plan accordingly.
Strong buying or selling may push price well outside a band. A tall bar can even print completely through the barrier in extreme conditions. General tactics suggest that violent reversals often follow these major band violations. But trading against these events carries risk since markets can print a short series of these volatile bars before the reversal takes place. Also note that this price action rarely occurs during intraday markets, except at the open.
Reduce risk by dropping down to the next lower time frame and waiting for a reversal there before executing a countertrend position. Odds also improve if the thrusting bars run into other forms of S/R that allow cross-verification for the entry level. Stay defensive during the trade. Once price returns within the band's limits, the underlying trend can reappear quickly unless the pullback generates other reversal signals. Look for Dark Cloud Cover or a similar candle pattern that fills any gap created by the bar outside the band. This complex setup can produce windfall profits if managed properly.
Swing traders work the quiet middle ground of Bollinger Bands for consistent profits. Build strategies that enter countertrend positions at one band and exit at the other. These swing setups face far less whipsaws than breakout entries at band extremes. Keep in mind that the center band presents a natural profit obstacle that needs special consideration when calculating reward: risk. Make sure a safe exit near this center point still produces a decent profit for the trade.
Multiple Support-Resistance
A broad range sets up profitable swing conditions for KLA-Tencor. This 13-bar Bollinger Band combines with simple horizontal S/R to uncover natural reversal zones at band extremes. Enter a countertrend position when the prior bar prints a candlestick reversal outside the band line. Wait for a break of the center band if no clear signal arises. Exit if price does not expand quickly in the other direction or if the signal fails and the candle shadow gets taken out. Watch S/R closely for positive feedback that will eventually carry price out of the sideways market.
Bollinger Bands, Support & Resistance
Use multi time frame Bollinger Bands to avoid expensive trend relativity errors. Look at the same market through 3 different time frames. This corresponds to one above and one below the chart that aligns with the holding period. Each setting produces a different range of band extremes and relative price location within the indicators. Match reward: risk to the central time frame but observe all intervening S/R on the other charts. Consider whether the holding period allows enough time to mount barriers and reach targets at other band levels.
Keep in mind that all bands change dynamically in response to price. This allows continuous feedback that shifts target values with each bar. Experience with this powerful indicator helps swing traders anticipate how it will move. The longer that price travels sideways, the tighter the bands become. Trend change for the bands themselves first begins with a turn by the band closest to the prior price trend. For example, when an uptrend prints along a top band, expect this side of the indicator to turn down before its twin when price moves into a range or downtrend.
Combine Bollinger Band study with momentum-based indicators. This helps filter directional movement from rangebound markets and improves trade timing. Add MA Ribbons to price and display the MACD Histogram across the lower pane. Price often remains well within band constriction during the early phases of new positive feedback events. As these indicators show rising momentum, shift attention to natural pattern/band breakout levels and look for entry within narrowing bars.
by Alan Farley
Bollinger Bands draw their power through two important characteristics. First, they exhibit an underlying trend-range axis just like price or moving averages. Second, they constrict or expand as they move. The interaction between these two forces draws unique patterns as bars unwind through its boundaries. Candlesticks work especially well with bands. For example, a Doji that strikes through a constricting band effectively signals a short-term reversal.
BBs bend and twist in response to price movement. These undulations predict how far trends should stretch before central tendency forces them back toward a central axis. Complex relationships develop between price-band direction and price-band constriction. For example, a trend tends to pause when constricting bands oppose it. It takes great skill to predict the bands' ultimate impact on price but is well worth the effort. More than any other tool, BBs pinpoint hidden swings and telegraph whether the profit door lies open or closed.
Bands may swing through relative highs or lows and then pull back into proportional retracement to start another trend thrust. Or they can enter extended ranges that meander back and forth without direction. Movement frequently stops dead in its tracks when price rises into a falling band or drops into a rising one. Sideways bands can appear in both rangebound and trending markets. Price often fails to reach new high or low territory until bands expand to clear the path. In many ways, Bollinger Bands predict time better than they predict price.
Buy Signal
The top Bollinger Band rises toward a test of the intraday high as Worldcom drops. This sharp divergence signals the eventual breakout after price finally reverses off of the bottom band. Watch band slope closely when bars return to test important highs or lows. It often reveals the time and force needed to push price through a S/R barrier.
Bollinger Bands buy signal
The skilled eye watches constricted bands in real-time to estimate the buying or selling force required to push them out of the way. They work extremely well during the second test of an important high or low. When markets finally break out, expanding bars often shoot into the band's edge where congestion forms a flag until the BB allows further movement. Bands constrict tightly around narrowing price in sideways markets. Apply NR7 methodology here to anticipate an impending positive feedback event.
Bollinger Bands signal early warning of trend change. Sharp price movement forces bands to expand outward. When these active markets finally turn sideways, the bands slowly tighten and roll toward price. Time passes and the BB door closes on rapid vertical movement. Experience enables the swing trader to quickly estimate the time required before bands will tighten and plan accordingly.
Strong buying or selling may push price well outside a band. A tall bar can even print completely through the barrier in extreme conditions. General tactics suggest that violent reversals often follow these major band violations. But trading against these events carries risk since markets can print a short series of these volatile bars before the reversal takes place. Also note that this price action rarely occurs during intraday markets, except at the open.
Reduce risk by dropping down to the next lower time frame and waiting for a reversal there before executing a countertrend position. Odds also improve if the thrusting bars run into other forms of S/R that allow cross-verification for the entry level. Stay defensive during the trade. Once price returns within the band's limits, the underlying trend can reappear quickly unless the pullback generates other reversal signals. Look for Dark Cloud Cover or a similar candle pattern that fills any gap created by the bar outside the band. This complex setup can produce windfall profits if managed properly.
Swing traders work the quiet middle ground of Bollinger Bands for consistent profits. Build strategies that enter countertrend positions at one band and exit at the other. These swing setups face far less whipsaws than breakout entries at band extremes. Keep in mind that the center band presents a natural profit obstacle that needs special consideration when calculating reward: risk. Make sure a safe exit near this center point still produces a decent profit for the trade.
Multiple Support-Resistance
A broad range sets up profitable swing conditions for KLA-Tencor. This 13-bar Bollinger Band combines with simple horizontal S/R to uncover natural reversal zones at band extremes. Enter a countertrend position when the prior bar prints a candlestick reversal outside the band line. Wait for a break of the center band if no clear signal arises. Exit if price does not expand quickly in the other direction or if the signal fails and the candle shadow gets taken out. Watch S/R closely for positive feedback that will eventually carry price out of the sideways market.
Bollinger Bands, Support & Resistance
Use multi time frame Bollinger Bands to avoid expensive trend relativity errors. Look at the same market through 3 different time frames. This corresponds to one above and one below the chart that aligns with the holding period. Each setting produces a different range of band extremes and relative price location within the indicators. Match reward: risk to the central time frame but observe all intervening S/R on the other charts. Consider whether the holding period allows enough time to mount barriers and reach targets at other band levels.
Keep in mind that all bands change dynamically in response to price. This allows continuous feedback that shifts target values with each bar. Experience with this powerful indicator helps swing traders anticipate how it will move. The longer that price travels sideways, the tighter the bands become. Trend change for the bands themselves first begins with a turn by the band closest to the prior price trend. For example, when an uptrend prints along a top band, expect this side of the indicator to turn down before its twin when price moves into a range or downtrend.
Combine Bollinger Band study with momentum-based indicators. This helps filter directional movement from rangebound markets and improves trade timing. Add MA Ribbons to price and display the MACD Histogram across the lower pane. Price often remains well within band constriction during the early phases of new positive feedback events. As these indicators show rising momentum, shift attention to natural pattern/band breakout levels and look for entry within narrowing bars.
CANDLE STUDY
In the 1700s a Japanese man named Homma, a trader in the futures market, developed a method of technical analysis to analyze the price of rice contracts known as candlestick charting. Candlestick charts display the high, low, open, and close for a security each day over a specified period of time, in a format similar to a bar chart, but in a manner that extenuates the relationship between the opening and closing prices. A narrow line (shadow or wick) shows the day's price range. A wider body marks the area between the open and the close, referred to as real body. If the close is above the open, the body is white or green (not filled); if the close is below the open, the body is black or red (filled). Steve Nison is credited with popularizing candlestick charting in the west and is seen as a leading expert on their interpretation.
Bullish Reversal Candlestick Patterns
A reversal pattern is one that indicates possible change in trend direction. Market trend must be bearish leading into the bullish reversal formation.
Long White Body, Hammer, Inverted Hammer, Bullish Belt Hold, Engulfing Pattern, Harami, Harami Cross, Piercing Line, Evening Doji Star, Meeting Lines, Three White Soldiers, Morning Star, Morning Doji Star, Abandoned Baby, Tri-Star, Breakaway, Three Inside Up, Three Outside Up, Kicking, Unique Three Rivers Bottom, Three Stars in the South, Concealing Baby Swallow, Stick Sandwich, Homing Pidgeon, Ladder Bottom, Matching Low, Marubozu
Bullish Continuation Candlestick Patterns
Continuation patterns appear in the middle of an existing trend and suggest that the trend will resume once the pattern is complete.
Separating Lines, Rising Three Methods, Upside Tasuki Gap, Side by Side White Lines, Three Line Strike, Upside Gap Three Methods, On Neck Line, In Neck Line, Marubozu
Bearish Reversal Candlestick Patterns
Long Black Body, Hanging Man, Shooting Star, Belt Hold, Engulfing Pattern, Harami, Harami Cross, Dark Cloud Cover, Doji Star, Meeting Lines, Three Black Crows, Evening Star, Evening Doji Star, Abandoned Baby, Tri-Star, Breakaway, Three Inside Down, Kicking, Ladder Top, Matching High, Upside Gap Two Crows, Upside Gap Three Crows, Deliberation, Advance Block, Two Crows, Three Buddha Top, Three Mountains Top, Tweezer Top, Marubozu
Bearish Continuation Candlestick Patterns
Separating Lines, Falling Three Methods, Downside Tasuki Gap, Side by Side White Lines, Three Line Strike, Downside Gap Three Methods, On Neck Line, In Neck Line, Marubozu
Candlesticks that Reflect Indecision:
Spinning Top, Doji
Daily Candlestick Play Instructions
Bullish Harami Candlestick Play Instructions
Bearish Harami Candlestick Play Instructions
3 Black Crows Candlestick Play Instructions
3 Soldiers Candlestick Play Instructions
Long Red Candlestick Play Instructions
Long Green Candlestick Play Instructions
Bullish Thrusting Line Candlestick Play Instructions
Weekly Candlestick Play Instructions:
Bullish Harami (Weekly) Candlestick Play Instructions
Bearish Harami (Weekly) Candlestick Play Instructions
3 Black Crows (Weekly) Candlestick Play Instructions
3 White Soldiers (Weekly) Candlestick Play Instructions
Bullish Reversal Candlestick Patterns
A reversal pattern is one that indicates possible change in trend direction. Market trend must be bearish leading into the bullish reversal formation.
Long White Body, Hammer, Inverted Hammer, Bullish Belt Hold, Engulfing Pattern, Harami, Harami Cross, Piercing Line, Evening Doji Star, Meeting Lines, Three White Soldiers, Morning Star, Morning Doji Star, Abandoned Baby, Tri-Star, Breakaway, Three Inside Up, Three Outside Up, Kicking, Unique Three Rivers Bottom, Three Stars in the South, Concealing Baby Swallow, Stick Sandwich, Homing Pidgeon, Ladder Bottom, Matching Low, Marubozu
Bullish Continuation Candlestick Patterns
Continuation patterns appear in the middle of an existing trend and suggest that the trend will resume once the pattern is complete.
Separating Lines, Rising Three Methods, Upside Tasuki Gap, Side by Side White Lines, Three Line Strike, Upside Gap Three Methods, On Neck Line, In Neck Line, Marubozu
Bearish Reversal Candlestick Patterns
Long Black Body, Hanging Man, Shooting Star, Belt Hold, Engulfing Pattern, Harami, Harami Cross, Dark Cloud Cover, Doji Star, Meeting Lines, Three Black Crows, Evening Star, Evening Doji Star, Abandoned Baby, Tri-Star, Breakaway, Three Inside Down, Kicking, Ladder Top, Matching High, Upside Gap Two Crows, Upside Gap Three Crows, Deliberation, Advance Block, Two Crows, Three Buddha Top, Three Mountains Top, Tweezer Top, Marubozu
Bearish Continuation Candlestick Patterns
Separating Lines, Falling Three Methods, Downside Tasuki Gap, Side by Side White Lines, Three Line Strike, Downside Gap Three Methods, On Neck Line, In Neck Line, Marubozu
Candlesticks that Reflect Indecision:
Spinning Top, Doji
Daily Candlestick Play Instructions
Bullish Harami Candlestick Play Instructions
Bearish Harami Candlestick Play Instructions
3 Black Crows Candlestick Play Instructions
3 Soldiers Candlestick Play Instructions
Long Red Candlestick Play Instructions
Long Green Candlestick Play Instructions
Bullish Thrusting Line Candlestick Play Instructions
Weekly Candlestick Play Instructions:
Bullish Harami (Weekly) Candlestick Play Instructions
Bearish Harami (Weekly) Candlestick Play Instructions
3 Black Crows (Weekly) Candlestick Play Instructions
3 White Soldiers (Weekly) Candlestick Play Instructions
Wednesday, July 2, 2008
CEMENT STOCKS
India Cements Ltd 530005 Rs.90.00 03/07/2008 Rs.200.00 25/06/2009 Open ACC Ltd 500410 Rs.385.00 03/07/2008 Rs.750.00 02/07/2009 Open High
Andhra Petrochemicals Ltd 500012 Rs.23.00 20/05/2008 Rs.39.00 17/11/2008 Open L
Megasoft Ltd 532408 Rs.96.00 25/04/2008 Rs.200.00 27/04/2009 Open Low
SREI Infrastructure Finance Ltd 523756 Rs.132.00 09/04/2008 Rs.200.00 08/12/2008 Open Low
UTV software Communications LTd 532619 Rs.869.00 04/02/2008 Rs.1500.00 04/02/2009 Open Low
Container Corporation Of India Ltd 531344 Rs.1616.00 28/01/2008 Rs.2400.00 26/01/2009 Open Low
Andhra Petrochemicals Ltd 500012 Rs.23.00 20/05/2008 Rs.39.00 17/11/2008 Open L
Megasoft Ltd 532408 Rs.96.00 25/04/2008 Rs.200.00 27/04/2009 Open Low
SREI Infrastructure Finance Ltd 523756 Rs.132.00 09/04/2008 Rs.200.00 08/12/2008 Open Low
UTV software Communications LTd 532619 Rs.869.00 04/02/2008 Rs.1500.00 04/02/2009 Open Low
Container Corporation Of India Ltd 531344 Rs.1616.00 28/01/2008 Rs.2400.00 26/01/2009 Open Low
Tuesday, July 1, 2008
inflation stocks-I
Rising Inflation, Spiking Crude Oil, Spiralling food prices, Rising Commodity prices are few of the tough tasks faced by Indian Economy in the last few months and the impact is likely to continue for the next 3-6 months.
The worst hit sectors during this period are Realty, Banking, Infrastructure, Aviation, Capital Goods, Consumer Electronics, Automibles, Textiles, Investment & Finance, Cement, Logistics, Retailing.
Least hit sectors include Telecommunications, Power, Media.
No hit sectors include IT, Sugar, Hotels, Pharma, Shipping.
Good for sectors like FMCG, Food, Oil Exploration, Fertilizers, Alternative Energy Companies(Solar, Bio Fuel)
So how to ride the next 6-9 month investment cycle ?
Though we always believe that sentiment is what that drives Indian Markets instead of looking at the fundamentals and sectoral space. But markets tend to recognize the same quickly once the steep fall slows down.
Lets look at the best companies from the above mentioned best Sectors during the troubled times. Remember the accumulation bands might seem a bit higher. Keeping the market situation we have mentioned the same. Please start accumulating slowly.
Food (Edible Oils) : The Indian vegetable oil economy is the world’s fourth largest after the US, China and Brazil.India imports half of its edible oil requirement, making it the world’s third-largest importer of edible oil.
1. KS Oils is an excellent pick from this space. About 14 producers of vegetable oils, including Gujarat Ambuja, KS Oil, Liberty Oil, Pranab Agro and Betul Oil, have formed a consortium to acquire 10,000 hectares of farmland in Uruguay and Paraguay to cultivate soybean, maize and sunflower. India Imports 3.8 million tonnes of palm oil. KS Oils bought 50,000 acres of palm plantation in Indonesia and plans to import 80,000 tonnes of the oil into India. But the fruits from Indonesia plantation will take 2-3 years though. Recently, the Indian government reduced the import duty on crude palm oil to 20 per cent from 45 per cent, while that on refined palm oil was trimmed to 27.5 per cent from 52.5 per cent to help curb inflation. KS Oils Ltd sees revenue rising to 32 billion rupees due to a rise in demand, following import duty cuts in mustard oil. The company had earlier targeted revenue at 30 billion rupees. The company expects net profit of 2 billion rupees in FY09.
Very Strong Accumulate : Rs 35-53
2. Ruchi Soya is the flagship of the Ruchi Group and it is one of the largest agribusiness company in India. It crushes about 25% of total soya crop in India and the company has also learnt to be scouting for palm cultivation in Malaysia and Indonesia and agriculture as a sector looks very promising in the long run. It has a refining capacity of 2.1 million tonnes per annum (mtpa) and crushing capacity of over 2.9 mtpa, the largest in the country. Nutrela and Ruchi Gold are the flagship brands of the company. It also has a portfolio of health oil variants and soya foods. It has recently forayed into health drinks.
Very Strong Accumulate : Rs 70-90
FMCG : Hindustan Unilever is a sound and stable investment during these times. But we do not expect major returns in the stock though downside is limited. Other good stocks in this space include Marico, Colgate. Better to avoid this space though limited downside as the returns are not expected to be worth it.
Oil Exploration/Production Companies : Cairns India and ONGC are two prominent players in this space. We believe Cairns India is likely to get the better among the two in terms of absolute returns. Markets have linked the Cairns India stocks price movement to the Internation Crude Oil prices. But soon the stock will be de-coupled from the Crude oil price movements.
Very Strong Accumulate : Rs 230 - 280
Dark horse in this space Reliance Petroleum.
Accumulate : Rs 150 - 175. Production expected to start around september. Stock price likely to race ahead and downsides are limited from the current pri
ce.
Alternative Energy Companies (Solar & Bio Fuel): Higher crude oil raised the immediate requirement for Alternative Energy sources and the global stock markets acknowledged the fact. Solar stocks across the globe are riding high with huge orders. Europe is the leading importer of solar panels and other solar products.
Spain is one of the most attractive countries for the development of solar energy, as it has more available sunshine than any other European country. The Spanish government is committed to achieving a target of 12 percent of primary energy from renewable energy by 2010 with an installed solar generating capacity of 400 megawatts (MW). Spain is the fourth largest manufacturer in the world of solar power technology and exports 80 percent of this output to Germany.
XL Telecom is the best bet in this space. The company's total outstanding order book for the export of solar panels stood at more than 5 billion rupees. The company through Saptashva Solar Ltd has firmed up a forward integration project to establish grid connected ‘solar farms’ in Spain and Portugal with an investment of Rs 1,000 crore. Of the Rs 1,000 crore, Rs 800 crore is being raised through debt from Spanish banks and the rest would be through XL Telecom equity.
Very Strong Accumulate : Rs 170 - 230
Moser Baer : Moser Baer India is investing about $1.5 billion in increasing its thin-film photovoltaic capacity to 600 mega watt (MW) over the next two years from the existing project capacity of 40 MW.As part of the expansion plans, a Moser Baer wholly-owned subsidiary, PV Technologies India, has signed a memorandum of understanding (MoU) with a leading US-based equipment supplier to secure supply of critical equipment. Moser Baer Photo Voltaic (MBPVL), another arm of the company, is on track to increase the crystalline silicon capacity to 80 MW by the end of the current fiscal. The company is seeking to raise about $150 million by listing on the Nasdaq exchange (A big trigger for the stock as solar is riding high)
Very Strong Accumulate : Rs 100 - Rs 140
Second rung stocks :
Bhagyanagar India
Bhagyanagar India recently formed a joint venture company named `Surana Ventures` for setting up of solar photo voltaic cell and module project in partnership with its promoters and a group company named Surana Telecom. The JV plans to manufacture and sell the equipment required for generating solar energy. It will be an 80% export-oriented unit with substantial tax-benefits.Bhagyanagar India and Surana Telecom will hold 40% each in the Rs 3 bn project with the remaining 20% being held by the core promoters of the company
Very Strong Accumulate : Rs 24 - 28
Goldstone Infratech
Goldstone Infratech Ltd recently announced a joint venture to set up a solar panel manufacturing facility in Hyderabad.The total cost of the project is estimated at 28 billion rupees over 4-5 years. One of the joint venture partners is Jusung Engineering, a Korean equipment supplier. Goldstone will hold 54 percent stake in the venture.
Very Strong Accumulate : Rs 35 - 45
Bio-Diesel Company : Southern Online Bio Technologies recently recieved the much-awaited order from APSRTC for the supply of 3 lakh liters of Biodiesel per month to its 12 depots in Hyderabad & Secunderabad. The transacted to over 25% of the Company's installed capacity, which is slated to go up by some 7 times over the next year or so. The Company has been supplying Biodiesel on regular basis to Tata Indicom, Idea Cellular, Air Tel, Taj & ITC Group of Hotels in Hyderabad, cement Industries such as Priya Cement, UltraTech Cement and Penna Cement apart from traders. The Company has also supplied 12,000 liters of Biodiesel of specified feedstock to Research, Designs and Standard Organisation (RDSO) of Indian Railways, Lucknow and is working closely with this organisation.
The Company has started work on its second bio-diesel unit at Vizag, for which APIIC has allotted 10 Acres of land in its Multi Product Special Economic Zone (APSEZ) at Atchutapuram, Vizag. The Company has performed the Bhoomi Pooja and commend civil works and is targeting to commence the commercial operations in early 2009.
Very Strong Accumulate : Rs 17 - 23
The worst hit sectors during this period are Realty, Banking, Infrastructure, Aviation, Capital Goods, Consumer Electronics, Automibles, Textiles, Investment & Finance, Cement, Logistics, Retailing.
Least hit sectors include Telecommunications, Power, Media.
No hit sectors include IT, Sugar, Hotels, Pharma, Shipping.
Good for sectors like FMCG, Food, Oil Exploration, Fertilizers, Alternative Energy Companies(Solar, Bio Fuel)
So how to ride the next 6-9 month investment cycle ?
Though we always believe that sentiment is what that drives Indian Markets instead of looking at the fundamentals and sectoral space. But markets tend to recognize the same quickly once the steep fall slows down.
Lets look at the best companies from the above mentioned best Sectors during the troubled times. Remember the accumulation bands might seem a bit higher. Keeping the market situation we have mentioned the same. Please start accumulating slowly.
Food (Edible Oils) : The Indian vegetable oil economy is the world’s fourth largest after the US, China and Brazil.India imports half of its edible oil requirement, making it the world’s third-largest importer of edible oil.
1. KS Oils is an excellent pick from this space. About 14 producers of vegetable oils, including Gujarat Ambuja, KS Oil, Liberty Oil, Pranab Agro and Betul Oil, have formed a consortium to acquire 10,000 hectares of farmland in Uruguay and Paraguay to cultivate soybean, maize and sunflower. India Imports 3.8 million tonnes of palm oil. KS Oils bought 50,000 acres of palm plantation in Indonesia and plans to import 80,000 tonnes of the oil into India. But the fruits from Indonesia plantation will take 2-3 years though. Recently, the Indian government reduced the import duty on crude palm oil to 20 per cent from 45 per cent, while that on refined palm oil was trimmed to 27.5 per cent from 52.5 per cent to help curb inflation. KS Oils Ltd sees revenue rising to 32 billion rupees due to a rise in demand, following import duty cuts in mustard oil. The company had earlier targeted revenue at 30 billion rupees. The company expects net profit of 2 billion rupees in FY09.
Very Strong Accumulate : Rs 35-53
2. Ruchi Soya is the flagship of the Ruchi Group and it is one of the largest agribusiness company in India. It crushes about 25% of total soya crop in India and the company has also learnt to be scouting for palm cultivation in Malaysia and Indonesia and agriculture as a sector looks very promising in the long run. It has a refining capacity of 2.1 million tonnes per annum (mtpa) and crushing capacity of over 2.9 mtpa, the largest in the country. Nutrela and Ruchi Gold are the flagship brands of the company. It also has a portfolio of health oil variants and soya foods. It has recently forayed into health drinks.
Very Strong Accumulate : Rs 70-90
FMCG : Hindustan Unilever is a sound and stable investment during these times. But we do not expect major returns in the stock though downside is limited. Other good stocks in this space include Marico, Colgate. Better to avoid this space though limited downside as the returns are not expected to be worth it.
Oil Exploration/Production Companies : Cairns India and ONGC are two prominent players in this space. We believe Cairns India is likely to get the better among the two in terms of absolute returns. Markets have linked the Cairns India stocks price movement to the Internation Crude Oil prices. But soon the stock will be de-coupled from the Crude oil price movements.
Very Strong Accumulate : Rs 230 - 280
Dark horse in this space Reliance Petroleum.
Accumulate : Rs 150 - 175. Production expected to start around september. Stock price likely to race ahead and downsides are limited from the current pri
ce.
Alternative Energy Companies (Solar & Bio Fuel): Higher crude oil raised the immediate requirement for Alternative Energy sources and the global stock markets acknowledged the fact. Solar stocks across the globe are riding high with huge orders. Europe is the leading importer of solar panels and other solar products.
Spain is one of the most attractive countries for the development of solar energy, as it has more available sunshine than any other European country. The Spanish government is committed to achieving a target of 12 percent of primary energy from renewable energy by 2010 with an installed solar generating capacity of 400 megawatts (MW). Spain is the fourth largest manufacturer in the world of solar power technology and exports 80 percent of this output to Germany.
XL Telecom is the best bet in this space. The company's total outstanding order book for the export of solar panels stood at more than 5 billion rupees. The company through Saptashva Solar Ltd has firmed up a forward integration project to establish grid connected ‘solar farms’ in Spain and Portugal with an investment of Rs 1,000 crore. Of the Rs 1,000 crore, Rs 800 crore is being raised through debt from Spanish banks and the rest would be through XL Telecom equity.
Very Strong Accumulate : Rs 170 - 230
Moser Baer : Moser Baer India is investing about $1.5 billion in increasing its thin-film photovoltaic capacity to 600 mega watt (MW) over the next two years from the existing project capacity of 40 MW.As part of the expansion plans, a Moser Baer wholly-owned subsidiary, PV Technologies India, has signed a memorandum of understanding (MoU) with a leading US-based equipment supplier to secure supply of critical equipment. Moser Baer Photo Voltaic (MBPVL), another arm of the company, is on track to increase the crystalline silicon capacity to 80 MW by the end of the current fiscal. The company is seeking to raise about $150 million by listing on the Nasdaq exchange (A big trigger for the stock as solar is riding high)
Very Strong Accumulate : Rs 100 - Rs 140
Second rung stocks :
Bhagyanagar India
Bhagyanagar India recently formed a joint venture company named `Surana Ventures` for setting up of solar photo voltaic cell and module project in partnership with its promoters and a group company named Surana Telecom. The JV plans to manufacture and sell the equipment required for generating solar energy. It will be an 80% export-oriented unit with substantial tax-benefits.Bhagyanagar India and Surana Telecom will hold 40% each in the Rs 3 bn project with the remaining 20% being held by the core promoters of the company
Very Strong Accumulate : Rs 24 - 28
Goldstone Infratech
Goldstone Infratech Ltd recently announced a joint venture to set up a solar panel manufacturing facility in Hyderabad.The total cost of the project is estimated at 28 billion rupees over 4-5 years. One of the joint venture partners is Jusung Engineering, a Korean equipment supplier. Goldstone will hold 54 percent stake in the venture.
Very Strong Accumulate : Rs 35 - 45
Bio-Diesel Company : Southern Online Bio Technologies recently recieved the much-awaited order from APSRTC for the supply of 3 lakh liters of Biodiesel per month to its 12 depots in Hyderabad & Secunderabad. The transacted to over 25% of the Company's installed capacity, which is slated to go up by some 7 times over the next year or so. The Company has been supplying Biodiesel on regular basis to Tata Indicom, Idea Cellular, Air Tel, Taj & ITC Group of Hotels in Hyderabad, cement Industries such as Priya Cement, UltraTech Cement and Penna Cement apart from traders. The Company has also supplied 12,000 liters of Biodiesel of specified feedstock to Research, Designs and Standard Organisation (RDSO) of Indian Railways, Lucknow and is working closely with this organisation.
The Company has started work on its second bio-diesel unit at Vizag, for which APIIC has allotted 10 Acres of land in its Multi Product Special Economic Zone (APSEZ) at Atchutapuram, Vizag. The Company has performed the Bhoomi Pooja and commend civil works and is targeting to commence the commercial operations in early 2009.
Very Strong Accumulate : Rs 17 - 23
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