Beyond Basics

Bull Call Spread : Options Strategy

2011-12-03T00:24:00.000+05:30

Bull Call Spread is the strategy you can use to profit from moderate rise in profit of underlying security.

What you do here is that you buy 1 Call Option and also sell a higher value Put Option

Example lets say current value of nifty is 5000 and lot size is 50. If the nifty call option is available for Rs 70 for the strike price of 5000 and sell call option position of 5200 for Rs 40.

Net money taken initially would be 70-40 = Rs 30*50.

A person will profit if Nifty stays between 5070 and 5160.

Maximum profit will be Difference in strike price - Amount paid = 200-30 = 170*50

Maximum loss will be amount paid = Rs 30*50.

ON the expiry if nifty is at 5120 then first contract will give profit of 120*50 = 6000 and second contract will become worth less = 40*50 = 2000, so the net profit will be 4000.

Both the contract should have same lot size and should expire in the same series.

This strategy was buying ans selling Call Options if the same thing is done with Put options then it is called Bull Put Spread.

CRR Cut by China..India might follow

2011-12-03T00:04:00.000+05:30

China has cut CRR ( Cash Reserve Ratio) because of the falling Manufacturing Purchasing Manager's Index to 32 month low.

India's RBI is increasing the interest continously but the market doesn't want or another rate hike so RBI following China's foot step might cut the Cash Reserve Ratio.

This bores well for banks because it will release money into the system which otherwise doesn't give any interest.

Live Nifty Options Prices

2011-12-02T19:08:00.003+05:30

Live prices

GMR Infrastructure Q3 net profit at Rs171.10 mn

2011-02-10T09:05:00.001+05:30

Details at

http://www.indiainfoline.com/Markets/News/GMR-Infrastructure-Q3-net-profit-at-Rs171.10-mn/5078567648

Good Article on GMR Infra

2011-02-09T01:56:00.002+05:30

Wanted to share the journey of GMR post libralization

http://www.mydigitalfc.com/companies/first-fly-over-rainbow-035

China Interest Rate Increase

2011-02-09T01:53:00.002+05:30

China's central bank raised interest rates to fight inflation. Benchmark Deposit Rate stands at 3% and lending rate at 6.06%

Equity SIP New Buzzword

2010-08-23T02:59:00.000+05:30

SIP Systematic Investment Plan was already famous and proven in Mutual Fund context but now SIP has also come directly into Equity Stocks which is essentially Individual Stocks.

Equity SIP is a new facility through which you can buy a script for a regular interval over a period of time for specified amount or for a specified quantity.

Amount based Equity SIP

Amount based Equity SIP is a SIP type wherein a fixed amount (or approximately the same) is invested in your desired scrip at each frequency

Quantity based Equity SIP

Quantity based Equity SIP is a SIP type wherein a fixed quantity of shares of your desired scrip is purchased at each frequency.

Currently few online brokers are providing this facility on select stocks. ICICI Direct is one of them.

Benefits of investing in Equity SIP are

It is a disciplined investments approach
Accumulates wealth by investing smalls sums regularly
Spreads and averages your cost of purchase (by buying in both ups and downs)
Removes the risk of timing the market
Reduces the risk of market volatility

NTPC to gain if RIL-NTPC dispute heads for truce

2010-08-22T23:01:00.000+05:30

Solicitor General recommended that NTPC be given gas at a concessional rate under a provision of the production sharing contract.

RIL can sell gas below market rate to government or government nominee so NTPC can get gas at $ 2.34 which was price quoted in 2004 tender.

NTPC is already working on the gujrat plants hoping to get the gas. Gas will be allotted to the plants which are expected to complete this year.

If NTPC gets price at lower rate this will improve profitability and secure gas for the plant in long term.

Might be good new for NTPC which is trading in a narrow range of 190-200 for past few months without any news trigger

Coal Block Development to get Boost

2010-08-21T21:38:00.000+05:30

The Lok Sabha has cleared amendment of Mines and Minerals Development and Regulation Act (India) (MMDR) of 1957.

Currently coal blocks for PSU (public sector unit) and private sector companies are not allocated through bidding process. A screening committee approves the blocks. This will change and now there will be competitive bidding process.

PSUs are kept outside of bidding process like Coal India. Coal blocks will be developed faster as new players will pay premium based on bidding.

26 blocks are fully developed out of 206 allotted till now.

If private players get more blocks, power production will get a leg up and many companies planning to foray into coal based power plants will see interest in obtaining the coal block for captive purpose.

Blackstone invest in Moser Baer Power Project

2010-08-18T18:37:00.000+05:30

Moser Baer India shares jumped 11% intraday closing 6.66% up. Blackstone has invested 300 million dollar.

Moser baer is company involved with making cd/DVD/Blue ray disks. It is also in Solar power and Entertainment business . Now it is entering thermal power with plans to setup around 4000 MW in thermal and 1000 MW in solar.

Deepak Puri and Ratul Puri, who are the promoters of Moser Baer India Ltd has founded Moserbaer Projects.

GMR Infra awake from Slumber

2010-08-18T11:03:00.000+05:30

China Huaneng Group may be buying GMR infra stake in Intergen at about 1.4 Billion dollars. GMR Infra bought Intergen at 1.1billion dollars. Apart from making profit of 300 million dolllars GMR will use other money to reduce interest liability which was dragging the profits down.

Lower Intereset Outgo with higher revenue increase due to delhi airport t3 opening and restarting of barge mounted power plants are big plus.

Fund tie up for other airport and power projects will get a boost. If the deal goes through it will be a very big positive for GMR Infra.

Hopefully the bad days should be near soon and should start its upward climb.

Should be in a much better price by next quarter results.

GMR is up 4.5% in today's trade.

RIL Reliance Industries and Shale Gas

2010-08-10T00:07:00.000+05:30

Shale gas is natural gas produced from shale. Shale gas has become an increasingly important source of natural gas in the United States over the past decade, and interest has spread to potential gas shales in Canada, Europe, Asia, and Australia. One analyst expects shale gas to supply as much as half the natural gas production in North America by 2020 [Source:Wikipedia.]

Illustration of Shale Gas

It's another fossil fuel boom in the making, although its cleaner-burning than coal, gas from shale still poses a severe threat to environmental security. Methods used for drilling that frees the gas requires the use of toxic chemicals that many fear could contaminate underground sources of drinking water that supply millions of people.

Reliance Industries believes that shale gas offers an exciting opportunity and that new drilling techniques are transforming the U.S. natural gas industry. Furthermore, the company estimates shale plays to contain in excess of 650 trillion cubic feet of natural gas.

Shale gas is emerging as a potential investment strategy, chiefly on the anticipated upsurge in demand for natural gas.

Natural gas is a clean energy source and is likely to replace coal.

Reliance has done 3 shale gas deals in 3 months.

20% stake in Carrizo's

40% stake in Atlas Energy's

45% stake in Eagle Ford Shale

Higher price of Shale gas is also attracting lot of interest and investment.

Shale gas investment will add profitability after 4-5 years but its an interesting space to watch out for in the coming years.

GMR Infra results Update.

2010-08-09T23:32:00.001+05:30

GMR Infra Q1 PAT up by 26% at Rs 28 cr

Revenue increased marginally but it was because barged mounted plant was getting shifted and its going to be running in fully capacity by August end.

This plant can contribute around 100 crore quarterly.

In 2 years operational capacity of power plants will go upto 2800 from 800 MW currently.

Male airport to achive financial closure by September.

GM Rao said that debt ratio might increase more or stay same but not go down because many projects are in capital infusion phase.

According to some analyst Medium term target is 70 and stop loss is around 54.

DSP BlackRock Micro Cap Fund & DSP BlackRock Small & Mid Cap Fund

2010-08-05T01:57:00.000+05:30

DSP BlackRock Micro Cap Fund / DSP BlackRock Small & Mid Cap Fund

Sensex for past few months has been moving in a very narrow range. Small/Mid Cap and Micro caps is the area where we are seeing growth.

Its hard to cherry pick individual stock in this area. Also it is sometime subject to manipulation so swings are high.

For Small and Micro cap stocks I think its better to invest through mutual funds where they are focussed on it and manage the chrun properly.

MicroCap Fund was started as Closed Ended Fund but now has been made open ended fund and is open to subscription.

Till it was closed ended I was investing in Small and Mid Cap Fund but now I am also going to invest in MicroCap fund.

The investment objective of the scheme is to seek to generate long-term capital appreciation from a portfolio that is substantially constituted of equity and equity-related securities, which are not part of the top 300 companies by market capitalisation.

It is high risk fund for people for higher apetite for returns. There is only growth option in this fund.

In the YOD( 16th July), the BSE mid-cap and small-cap indices have outperformed the Sensex. The BSE mid-cap and small-cap grew 10.12% and 12.99%, respectively while the Sensex delivered returns of just 2.81%.

Investor should have basket of funds some from largecaps, some diversified and some from small and mid/micro cap category to not miss any rally in one category.

DSP Black Rock Micro Cap Fund, a new entrant has also claimed CRISIL Fund Rank 1, in the Small & Midcap category.

Diversified funds have given returns in the range of 5-10% but micro cap funds recently have given returns in the range of 30%

The highest return of 34% has been generated by DSP BlackRock Micro Cap Fund.The fund has invested around 94% in mid- and small-cap stocks and less than 1% into large-caps.

Investors can subscribed some amount in this fund

GMR Infra Updates

2010-07-25T08:21:00.000+05:30

GMR Infra has put the international power portfolio for sale. Intergen which operates power plants in US,Australia was bought by GMR in 2008 where it paid around 960 million dollars for 50% stake.

GMR is building number of power plants in India and also has a barged mounted plant.

Recently DIAL t3 terminal got opened which is build by GMR Infra. They are also planning to invest around $ 400 million for Male airport.

All its projects are long gestation and this stock can give returns in long term though slowly. Once the investment phase is over P/E ratio will improve and stock price will rise. Holding for atleast 2 years will give good returns

SJVN subscribed 1.83 times

2010-05-03T14:31:00.000+05:30

The Initial Public Offering (IPO) of SJVN Limited which opened for subscription on April 29, 2010 will be closed today on Monday - May 3, 2010.

The IPO has received subscription of 1.83 times with total bids for 758380250 equity shares against the offer of 415000000 equity shares.

Parekh Aluminex Target acheived..

2010-05-02T10:17:00.000+05:30

Parekh auminex as expected as almost doubled in last 3 months.

http://beyond-basics.blogspot.com/2010/01/parekh-aluminex.html ( Around Rs130)

Currently it is trading at 255.10 +17.70 +7.46%

Goenka Diamond & Jewels Limited IPO

2010-03-24T10:07:00.001+05:30

Goenka Diamond & Jewels Limited is entering the capital markets with an initial public offering (IPO) of 10,000,000 equity shares of face value of Rs.10 each with a price band of Rs. 135- 145 per share. The Company is looking to raise in excess Rs. 1.35 bn through this issue. The issue shall constitute 30.93% of the fully diluted post issue paid up capital of the Company.

The issue appears attractive with an annualized FY10 P/E of 6.9x compared to an average of 15.7x for its peers (Shrenuj, Asian Star, Renaissance, Rajesh Exports and Gitanjali).

It has enjoyed a superior ROE (FY09) of over 46% compared to a peers’ average of 10%-18%.

I think we should go ahead and subscribe to the issue.

Irrational Exeburance in Primary Markets (IPO)

2010-03-21T23:03:00.000+05:30

Primary market is back in boom after lying low for quite some time. Other than PSU FPO or IPO. Private sector IPOs are getting subscribed more than 50-100 times. QIBs and NIIs are subscribing almost more that 100 times.

Is there a strong appetite or it is a signal that a bubble formation has started and its time to exit. Only coming time will tell whats the truth.

REC FPO though just managed to subscribed has given substantial gain from Rs 203 FPO price and current price of Rs 255. Retail got full allotment on 1 lac because of low response and are sitting on a healthy profit of Rs 25000.

NMDC is also around Rs 350 and retail is going to get at Rs 285 with gaurantee of almost full allotment.

Other IPOs are getting subscribed 40-50 times and getting allotment is almost luck or you might be lucky to get 1 lot which doesn't make much profit.

I think now is the time to think which company offers good long term benefits and go for it even though the IPO/FPO might not be getting subscribed. If your conviction is correct then you can make huge amount of money.

Lets see how the coming IPOs fare. Here are few which must be watched

#NMDC
# IL&FS Transportation Networks Limited
# PRADIP OVERSEAS LIMITED
# PERSISTENT SYSTEMS LIMITED
# SHREE GANESH JEWELLERY HOUSE LIMITED

New Affordable Housing Projects in Bangalore

2010-03-20T23:26:00.000+05:30

Here are few Housing projects which are yet to complete and will be complete in few months or around 1-2 years

HM Capital (Marathahalli)

HM North City (Yahalanka)

SJR Unity (Marathahalli)

NItesh Flushing meadows (whitefield/ITPL)

Provident-WelWorth City (doddaballapur)

Kumar Prince Town (JalaHalli)

Westend Heights New Town (BTM Extension)

Patel Smondoville (Neotown)

Plama Heights (Hennur Road)

Rohan Mihira (Marathahalli)

Rohan Jharokha(old airport road)

Alpine Pyramid (Sahakar Nagar)

Alpine Eco (Marathahalli)

Profit Booking Time : Year End Coming

2010-03-20T23:21:00.000+05:30

Stock Market rose quite a lot this year from last March to this March.
You would have made lot of money but if you were also invested in sectors which didn't perform or were laggards you would be sitting at some loss in those sectors like Telecom or recent IPOs like NHPC which are below initial offering.

To reduce tax liability this is the time to book losses in them to offset the profit made this year.

Others will start doing it or has already started and stock market also has peaked so this is the time to cut off the laggard stock from the portfolio and clean it up along with reducing the tax liability.

Jubilant Food's IPO Listing Rocked

2010-02-09T16:41:00.000+05:30

As suggested on 16th January to subscribe to Jubilant IPO, the listing has rocked and stock gained 65% on listing and is 10% up again today.

Anchor investor has bought additional stake on listing and counter witnessed huge buying interest.

Hope the PSU IPOs and FPOs get a good response after lack luster response to NTPC. bad response can be attributed to weak market conditions and operators trying to beat the stock.

NTPC at this price seems to be a low risk even though it goes below FPO price. 10-15% annual gains are easily expected.

Infinite computers also good positive listing , Adani power which was priced at Rs 100 is also above the IPO price at 110 currently with 10% return.

Moser Baer at current price look attractive and GMR infra around Rs 50 or lower seems to be a good bet. It has lot of annuity and toll projects which will provide cash flow for next 20-30 years.

Lot to look out in the next few weeks. Rail Budget, General Budget, interest rate, food inflation and oil prices etc.
News from european/american markets is not too positive and tilting towards negative so next trigger has to come from internally to take the market to the intermediate high so I think in February market seem to be going no where overall with usual ups and downs with overall flatish so we can consider it as a traders markets and not investors for atleast this month till we get cues towards some direction.

NTPC FPO : 5th Feb Last day tomorrow

2010-02-04T16:02:00.001+05:30

NTPC Limited (NTPC), India’s largest power generation company, has come out with a follow-on public offer (FPO) of 412,273,220 equity shares of Rs. 10 each at a floor price of Rs. 201 per share which is at a discount of ~Rs. 5 to the ruling market price, with the Government of India looking to raise in excess of Rs. 82.87 bn by divesting 5% of its stake in the company.

NTPC is the best defensive play in the Indian power sector considering its position of market leadership, strong balance sheet, high credit rating, efficient operational capabilities and stable cash flows. At the floor price of Rs. 201 for the issue stock appears to be at discount.

I think we should go ahead and subscribe to this issue.

IPO Allotment Status

2010-01-23T20:36:00.001+05:30

Check IPO Allotment Status Here for Karvy

Check IPO Allotment Status Here for BigShare

Check IPO Allotment Status Here for Linkintime

Jubilant Foodworks IPO subscribed 30.68 times

Current IPOs
# Vascon Engineers
# Syncom Healthcare
# Thangamayil IPO
# Aqua Logistics IPO
# NTPC Limited FPO

Markets in coming days

2010-01-22T08:48:00.001+05:30

As expected stock market has corrected and might correct more today seeing bad results from ICICI Bank , L&T. Baking and Engineering/Construction space will be affected.

Dollar hardening also has made carry trade difficult which will also reduce inflow.

This is what I wrote last week

"Soon we should see some correction in the market and should avoid playing the dangerous waters of worthless stocks and should probably book some profits and keep money on the table for the opportunities which will arrive after the correction."

This fall should help people to enter in good stocks who missed the recent rally