Posts Tagged ‘Trading’

CIL sets IPO record; to list on Nov 4

India’s IPO market created history on Thursday with state-owned Coal India share issuer in the becoming the biggest country, beating Reliance Power’s 2008 initial public offering.

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At the time of going to press, the CIL issue was subscribed 15.26 times, collecting Rs 2,36,113.28 crore. The shares will debut on the market on November 4, a day before Muhurat trading that marks Diwali.

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Responding to late rush from retail investors, the company postponed the close of the issue to 9 pm.

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At the upper end of the band, CIL will be the seventh biggest Indian company by market cap, after ONGC, State Bank of India, TCS, Reliance Industries, Infosys Technologies and NTPC, based on Thursday’s closing price. CIL’s Rs 15,474 crore IPO has overtaken Reliance Power’s Rs 11,700 crore issue.

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Buoyant demand from retail and wealthy investors on the final day added to the strong response from institutional buyers. This also signalled success for the government’s upcoming share sales.

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Retail investors, who often take cues from institutions in IPOs, had put in bids for shares 1.44 times or for 28,60,44,375 shares. Retail investors will get a five per cent discount on the final issue price.

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Wealthy individuals had separately bid for 13.89 times the shares available for them.

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Bidding for the mega IPO closed on Wednesday for qualified institutional buyers, including foreign institutional investors, mutual funds and insurance firms. And for the portion reserved for them, the issue was over subscribed by 24.70 times, lead by FIIs.

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The IPO has generated a demand of 493,38,72,050 shares from FIIs. Calculated at the upper end of the price band, this demand is worth Rs 1,20,879.86 crore and at the lower end worth Rs 1,11,012.12 crore. Even at the low end, the demand surpasses the record Rs 1.08 lakh crore pumped in by FIIs into the capital
market.

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India’s largest new issue came amid a flurry of big deals in Asia.

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At the top of its price range, Coal India would be valued at 15.7 times trailing earnings. The issue also got the highest demand for an Indian issue, helped by qualified institutional buyers.

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The demand from QIBs for CIL was at Rs 1,73,398 crore with 100 per cent application amount, compared with Rs 1,88,923 crore with 10 per cent margin for Reliance Power IPO. In case of Reliance Power, the QIB portion was covered 30.68 times.

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“The response to Coal India IPO, from all classes of investors, has surpassed even the most optimistic predictions. It has caught even the biggest optimists by surprise,” SMC Global Securities strategist Jagannadham Thunuguntla said in a note.

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He said the response puts the government on target to achieve its divestment target of Rs 40,000 crore in fiscal 2011 and even exceed it if other issues like the follow-on offering of Power Grid, Steel Authority of India, ONGC, Shipping Corporation of India, Indian Oil Corporation and IPO of Manganese Ore fall in place.

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The government, which has collected Rs 17,500 crore from public issues, including Coal India, may raise its divestment target and get over Rs 58,500 crore, SMC Capital added.

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At the upper end of price range, Coal India issue is worth Rs 15,474 crore and at the lower end it would fetch about Rs 14,211.81 crore.

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The upper band would also give it a market capitalisation of Rs 1.54 lakh crore ($34.7 billion).

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Meanwhile, the broader market recovered from a two-day slump and closed up 1.95 per cent at 20,260.58 points. Now all eyes will be on whether it will be a strong listing on the eve of Diwali.

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Weekly Update 18th – 22nd October 2010

Most of the world markets rallied in the week gone by on the buzz of further quantitative easing by U.S. Without giving details about the strategies on how the central bank will act its Nov. 2-3 meeting, Federal Reserve Chairman Bernanke said additional monetary stimulus may be warranted because inflation is too low and unemployment is too high.

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Fed is considering ways for raising inflation expectations to encourage people to believe that prices will start rising at a faster pace so that they would spend more of their money now. Retail sales in U.S.climbed more than forecast as purchases rose 0.6 percent following a 0.7 percent gain in August and manufacturing in the New York region expanded in October at a faster pace than anticipated.

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China’s Shanghai Composite Index saw gains of 8.5 percent on the anticipation that China’s banks show strong earnings growth this quarter as the lending has beaten the forecast. Moreover the strong exports growth of 25.1 percent in September mirrors the strong underlying economic momentum. The country’s foreign-exchange reserves, the world’s largest, surged by a record to $2.65 trillion at the end of September.

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India’s wholesale price index rose to rose 8.62 percent in September from a year earlier after an 8.5 percent gain in August. Manufactured product inflation and Food price inflation rose by 0.3 percent and 1.6 percent respectively in September fromthe previous month. RBI Chief Subbarao said that inflation in India is being “quite stubborn,” a sign that controlling prices remains the central bank’s priority.

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Reserve Bank Deputy Governor Subir Gokarn signaled the central bank may intervene in the currency markets to shield exporters from the strengthening rupee. The capital account showed a surplus of $17.5 billion in the quarter to June 30, compared with a record shortfall of $13.7 billion in its current account.

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Foreign investors have so far poured approximately $23 billion in stocks and 10 billion indebt this year. Industrial production expanded by 5.6 percent in August after seeingan expansion of 15.2 percent in July.Going next week the main attraction for retail investors would be the primary market with Mega IPO of Coal India slated to open on 18th October. As Infosys has already rung the bell with positive surprise in terms of earning growth, the investors would now look forward to numbers of companies like L&T, HDFC, Bajaj Auto, etc that are scheduled to announce numbers next week.

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Nifty has support between5870-5950 and Sensex between 19200-19640 levels.With expecting second round of monetary easing, investors dumped dollar and endowed other investment avenues. Commodities extended a rally to the highest intwo years and CRB closed near the mark of 300. The dollar fell to its lowest in 10 months against a basket of currencies and breached the mark of 77. Five week continuous downfall enhanced metals and agricultural commodities.

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Gold gave heroic performance and made another life time high. It rose more than 25% in 2010.Silver is also trading near 30 year high. However, being prudent investors, one should book profit in gold and silver, considering safe trading. Base metals are expected to trade in a range. Crude oil should trade in range $80-85 in short run on mixed fundamental. OPEC has decided to keep the production quota unchanged in last meeting. Agro commodities should trade with high volatility ahead of expiry of October contract.

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BHEL trades in red despite bagging order worth Rs 3700 crore

Bharat Heavy Electricals(BHEL)is currently trading at Rs. 2,661.50, down by 4.95 points or 0.19% from its previous closing of Rs 2,648.60 on the BSE.

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The scrip opened at Rs 2,668.40 and has touched a high and low of Rs 2,695.00 and Rs 2,655.75 respectively. So far 77,003 shares were traded on the counter.

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The BSE group ‘A’ stock of face value Rs 10 has touched a 52 week high of Rs 2,695.00 on 07-Oct-2010 and a 52 week low of Rs 2,105.00 on 04-Nov-2009.

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Last one week high and low of the scrip stood at Rs 2,695.00 and Rs 2,489.00 respectively. The current market cap of the company is Rs 1,30,334.70 crore.

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The promoters holding in the company stood at 67.72% while Institutions and Non-Institutions held 26.19% and 6.09% respectively.

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State run, Bharat Heavy Electricals (BHEL) has bagged an order from Karnataka Power Corporation (KPCL) valued at Rs 3700 crore. The order bagged is for setting up the 700 MW Supercritical Unit-3 at Bellary Thermal Power Station (TPS) in Karnataka, on turnkey basis. Bellary TPS is already equipped with a BHEL-built 500 MW thermal set (Unit-1) while Unit-2 also of 500 MW, is presently under execution by BHEL.

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With the present order, BHEL has maintained its track record of bagging most of the orders for power generating equipment in Karnataka. The company for bagging this order outbid domestic rival Larsen & Toubro (L&T) under the stiff International Competitive Bidding (ICB).

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In Karnataka, BHEL is also executing the 2×800 MW Yeramarus supercritical TPS of Raichur Power Corporation (RPCL), a joint venture between KPCL and BHEL, which has been set up to build, own and operate supercritical thermal power plants in Karnataka. The company, in total, has commissioned about 5,000 MW of power generating sets in the state, which include thermal as well as hydro units of various ratings.

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Weekly Update 27th September – 1st October 2010

Indian Markets posted fourth weekly consecutive gains led by rising optimism of growth and portfolio investments. The run up in the market was phenomenal and beyond expectations of market participants. Global investors seems to be going more anxious about India consumption and growth, complemented by continued monetary accommodation by developed nations in  order to propel growth. Indian Government recently raised the cap of foreign investments by $ 5 billion in federal and corporate bonds with a residual maturity of over five years. The step is viewed very positively in the sense that the ease of limit in federal bonds will take out interest rate pressure from the banks. The ease in corporate bonds issued by companies in the infrastructure sector will fill the estimated financing requirement of $1 trillion in the five years to 2017.


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U.S. central bank kept its benchmark interest rate in the range of zero to 0.25 percent .The bank said that they are prepared to provide additional accommodation in the light of slower economic recovery. The statement raised the speculation that the bank may buy more treasuries down the year. Weaker growth has still kept the unemployment at above 9 percent levels and reflects that companies are still cautious. The U.S. markets surged to highest level since May as the orders for durable goods rose the double of market expectations.

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Another happening that market is keeping an eye on is the political pressure building on Obama administration to take a stance on the China’s currency policy. The yuan has appreciated about 2 percent against the dollar since the central bank said it would pursue a more flexible exchange. However U.S. wants to see more rapid and “significant” rise in the yuan’s value.

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With the visible positivity across the globe, Indian markets are maintaining up move and managed to close above the psychological mark of 6000 levels on the weekly basis. The weakness in the dollar index clearly strengthens the equity markets and lead to the fresh breakout especially in US and European counterparts.

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One should maintain the stance of buying on dips. The Midcap stock may provide handsome return in the near future. Nifty has support between 5900- 5810 and Sensex between 19640-19200 levels.

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It appears that bullion counter is taking advantage of every opportunity and making new highs now and then on rock solid fundamentals. Weaker than expected growth in manufacturing and services industries of euro zone, sovereign debt crisis in Ireland, plummeting dollar index amid some poor economic releases fuelled rally in bullions. Negative tone of global economy capped the upside of base metals and energy  counter, even fall in dollar index could not give much impact and they appeared shy to break the resistance. Local currency appreciation locked the movement of commodities. This week is full of event risk. GDP data of US and UK, consumer confidence data and employment data of US may give further direction to  commodities. Crude oil is witnessing lackluster trading and thus moving in range on ambiguity in the world economy. Energy counter needs big news for further direction. Spices should revive in this week.

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Ispat Industries leads the gainers of group ‘A’ on BSE

Ispat Industries is currently trading at Rs 18.65, up by 0.75 points or 4.19 % from its previous closing of Rs. 17.90 on the BSE.

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The scrip opened at Rs 18.15 and has touched a high and low of Rs 19.50 and Rs 17.90 respectively. So far 10108340 shares were traded on the counter.

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The BSE group ‘A’ stock of face value Rs 10 has touched a 52 week high of Rs 24.95 on 01-Oct-2009 and a 52 week low of Rs. 16.45 on 08-Jun-2010.

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Last one week high and low of the scrip stood at Rs 19.60 and Rs 17.60 respectively. The current market cap of the company is Rs 2328.75 crore.

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The promoters holding in the company stood at 41.14 % while Institutions and Non-Institutions held 14.44 % and 44.41 % respectively.

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The other top gainers of BSE group ‘A’ were Bosch up by 2.83%, ONGC up by 2.74 %, Gail India up by 2.56%, Cummins India up by 2.51%.

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Britannia Industries Rises on Fixing Record Date for Stock Split

Britannia Industries is currently trading at Rs 2,100.40, up by 23.45 points or 1.13% from its previous closing of Rs 2,076.95 on the BSE.

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The scrip opened at Rs 2,025 and has touched a high and low of Rs 2,139 and Rs 2,025 respectively. So far 7,512 shares were traded on the counter.

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The BSE group ‘B’ stock of face value Rs 10 has touched a 52 week high of Rs 2,380 on 05-Aug-2010 and a 52 week low of Rs 1,496.65 on 24-Sep-2009.

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Last one week high and low of the scrip stood at Rs 2,350 and Rs 2,025 respectively. The current market cap of the company is Rs 5,036.05 crore.

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The promoters holding in the company stood at 50.96% while Institutions and Non-Institutions held 27.47% and 21.58% respectively.

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Britannia Industries has informed that the company has fixed September 09, 2010 as the record date for ascertaining the shareholders of the company who will be entitled to receive five equity shares of the face value of Rs 2 each of the company in lieu of every one equity share of the face value of Rs 10 held by them in terms of the sub-division of shares approved by the shareholders of the company at the annual general meeting held on August 09, 2010.

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COMBINING TECHNICAL ANALYSIS WITH OTHER RESEARCH TECHNIQUES

Though technical analysis as a research tool can be used in isolation but for the betterment of subject under study i.e. financial markets; we can employ other research tools in combination to technical for the best possible outcomes. Due to lack of technical knowhow, people opt for one of the many research tools available to us. On the other hand, markets are globalizing and probability of generating return is diminishing with the every passing day so to surpass the competition, one should have the basic knowledge of the other research tools as well so that they can deploy the same as and when required. Technical analysis is concerned with when and how to place money. It determines the optimal timing for a position and conclusions about how long to stay in a particular trade have significant importance for the kind of derivatives structure one may use.

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Using derivative instruments requires strong background as the nature of the product has several advantages and at the same time disadvantages if used without the proper understanding.

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So by combining the aforesaid research methodology, there are various trading possibility arises which ensure sustainability of return despite fluctuating market conditions. In emerging markets, these concepts are getting popular for the consistent return with minimum risk. Derivatives help to hedge the position in the underlying to avoid unmanageable losses.

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For success in any market condition, one need to know the prevailing trend which we can make out through technical analysis now comes the derivative part that what we can do within that trend for maximizing the return with the minimum risk. There are N numbers of trade possibilities once you generalize the market direction well. Technically, there are tools like Moving average, which indicates the prevailing trend once we overlay above the same on price chart so if the trend is up the bullish strategy like Bull call spread, call buying and many more. In other words, there are techniques for every market condition so understanding of derivative will give you an edge as the major segment of the market participant is still not clear over the profitable usability of the same so all you need is confirm the prevailing trend whether its’ up, down or sideways and design the strategy accordingly.

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To start with, it does require study of different terminology and their implications from the derivative segment that will ultimately be fruit full in future.

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By taking an example, the concept will be crystal clear. In the recent past, I have employed one of those techniques for trading Reliance industries. The related analysis is explained with the chart shown from the snap shot of the report dated 09th June, 2010.

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On the weekly charts, it was trading in uptrend channel with the slow pace of inclination. It tested the lower band of the channel thrice in the past and was trading around the same zone. With the help of Bollinger band, we noticed that the bottle neck pattern was formed which indicated possibility of sharp move either side in the near future with rise in volatility.

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Accordingly, we recommended buying straddle. Strategy – Buy CA 1000 June@ 30 and Buy PA 1000 June @ 21 so the total cost of building strategy was 30600 {total premium paid (i.e. 30+21= 51) * lot size of 300*2}for the target of overall rise in the premium paid by `20-30 (i.e. – `71-81) with the stop loss of decline in premium paid by Rs 10. ( i.e. `41) Though the overall trend was sideways but we witnessed that such opportunity may arise due to rise in volatility and trigger the position accordingly.

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Within a week, it outperformed the above mentioned target by good margin. The idea is to enhance the base so that the probability of beaten down in adverse situation reduces. Better defense is more important than attack and derivative provide the same against the market odds when one fails to realize that the deterioration may erode the capital if not tackled on time so it make sense to combine the derivative strategy with technical to get the optimal returns with calculated risk.

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