morning thoughts...
As said and expected the markets completely stayed in a range with minimal oppurtunity on the indices but gave multiple oppurtunities on stocks.
Technically the markets are in consolidation mode and in a break mode and cannot trade in a range for long
Newspaper headlines are doing a great job of whetting investor appetite these days. Be it election results, cabinet expansion, reforms in the making, every headline is doing its bit to help the Sensex gather momentum. And even as the benchmark index sits pretty at life time highs, investors seem to be hardly worried about valuations.
Now ever since the election results were out in May, the stock market rally has been based on the premise that the economy will finally shake off the policy paralysis. Expectations that reforms will allow companies to grow at significantly higher rates have been factored into their valuations too. More so for smaller companies that can fetch better valuations as growth picks up. As a result, even as the Sensex is trading at trailing 12 month's price to earnings (P/E) multiple of around 19 times, the BSE Small Cap is richly valued at 37 times trailing P/E!
Why not invest in stocks when there is a fundamental improvement in terms of growth rate
Well the trend of investing in growth stocks is undeniably lucrative in an economy like India.
However the problem is that many investors are blindly following this trend of growth investing without realizing that not every fast growing company is creating wealth. In fact, a company that has very low margins and grows at a very fast rate by reinvesting capital in growth tends to destroy shareholder wealth rather than create it.
Data from the BSE 100 group of companies shows that companies with wafer thin margins are the ones clocking the fastest growth rate. So if you were to select stocks based on solely the growth criteria without paying any heed to margins, the chances of losing money are much higher than creating wealth. In fact an investment in such stocks even over a long period of time tends to produce very disappointing results.
Coming to the commodity markets bullions , base metals and energy will continue to trade volatile with a negative bias
www.astroeyes.blogspot.in
Our last days convert 10k into 30 k was Karnataka bank 130 ca
Yesterday's calls sent...
Natural gas mcx- sell at cmp 267 sl 269 targets 260 - booked at 261
Nifty - sell at cmp 8402 sl 8425 targets 8350 - went 8352
Karnataka bank 130 ca - buy at cmp 5 sl 3.50 targets 10 - went 10.20
Double bumper Lic 390 ca - buy at cmp 11 sl 9 targets 20 - went 17.55
Jain irrigation - buy at cmp 81 sl 79 targets 86 - went 88.30
Hdil - sell at cmp 88 sl 89 targets 85 - hit sl
As said and expected the markets completely stayed in a range with minimal oppurtunity on the indices but gave multiple oppurtunities on stocks.
Technically the markets are in consolidation mode and in a break mode and cannot trade in a range for long
Newspaper headlines are doing a great job of whetting investor appetite these days. Be it election results, cabinet expansion, reforms in the making, every headline is doing its bit to help the Sensex gather momentum. And even as the benchmark index sits pretty at life time highs, investors seem to be hardly worried about valuations.
Now ever since the election results were out in May, the stock market rally has been based on the premise that the economy will finally shake off the policy paralysis. Expectations that reforms will allow companies to grow at significantly higher rates have been factored into their valuations too. More so for smaller companies that can fetch better valuations as growth picks up. As a result, even as the Sensex is trading at trailing 12 month's price to earnings (P/E) multiple of around 19 times, the BSE Small Cap is richly valued at 37 times trailing P/E!
Why not invest in stocks when there is a fundamental improvement in terms of growth rate
Well the trend of investing in growth stocks is undeniably lucrative in an economy like India.
However the problem is that many investors are blindly following this trend of growth investing without realizing that not every fast growing company is creating wealth. In fact, a company that has very low margins and grows at a very fast rate by reinvesting capital in growth tends to destroy shareholder wealth rather than create it.
Data from the BSE 100 group of companies shows that companies with wafer thin margins are the ones clocking the fastest growth rate. So if you were to select stocks based on solely the growth criteria without paying any heed to margins, the chances of losing money are much higher than creating wealth. In fact an investment in such stocks even over a long period of time tends to produce very disappointing results.
Coming to the commodity markets bullions , base metals and energy will continue to trade volatile with a negative bias
www.astroeyes.blogspot.in
Our last days convert 10k into 30 k was Karnataka bank 130 ca
Yesterday's calls sent...
Natural gas mcx- sell at cmp 267 sl 269 targets 260 - booked at 261
Nifty - sell at cmp 8402 sl 8425 targets 8350 - went 8352
Karnataka bank 130 ca - buy at cmp 5 sl 3.50 targets 10 - went 10.20
Double bumper Lic 390 ca - buy at cmp 11 sl 9 targets 20 - went 17.55
Jain irrigation - buy at cmp 81 sl 79 targets 86 - went 88.30
Hdil - sell at cmp 88 sl 89 targets 85 - hit sl
