On the game of investment

Markets need to be analysed on three lines: Fundamental, Technical and Quantitative. Investors or traders tend to adopt any or all of these tools for making investment decisions. Track record, business opportunity, people, technology, operating leverage, valuations, all has a bearing on investment decisions.

Investment planning depends on your financial objectives, risk-return profile, time horizon and the capital that you wish to deploy. Once you are through with this basic exercise, you can opt for such financial products that suit your requirements.

You should go for fundamentally sound stocks. Slow growth in price and market price fluctuations really don't matter at all in long run. Just stay invested and you’ll enjoy decent returns.

Invest across blue chips across sectors and a select few mid caps with good business model. It’s better to begin with mutual funds as they happen to be professionally managed by competent fund managers across sectors and themes. Don’t trade against the tide, book profits and keep trailing stop losses. No investment would guarantee 100% return in a year. For safer bets, invest in FDs and MFs.

Choosing a good broker

Do comprehensive research on the options available. However, don’t fall for low brokerage rates alone. Also consider the track record of service and research.

On low-investment business ideas

Low is a relative term. It varies from venture to venture.  For instance, setting up a new hotel might require a couple of lakhs but if you were to start a mining business, even a few crores may prove to be a very negligible amount.

On Basic Market Terminology

A bid price is the highest price that a buyer (i.e., bidder) is willing to pay for a stock. It is usually referred to simply as the "bid." Vis-à-vis Ask price, also called offer price, offer, asking price, or simply ask, is a price a seller of a good is willing to accept for that particular stock.

A stop order (also stop loss order) is an order to buy (or sell) a security once the price of the security has climbed above (or dropped below) a specified stop price. A limit order is an order to buy a security at not more, or sell at not less, than a specific price

The era of trading in physical share certificates was very cumbersome. Now the shares are held in a dematerialized form and these securities are held in an account called as Demat Account.

Technically, when a stock crosses above its 200-DMA with impressive volumes and positive crossovers in daily Oscillators, it would be an ideal time to go long. The basic formula to calculate 1st,2nd,3rd support and resistance level - Pivot tables

 On the formula for making it big in stocks

 Firstly, don’t be desperate to make too much money too soon. Disciplined investing and time spent in the market is the key. To begin with, identify two or three good Mutual Funds and invest through them.

On Indian dependence on the West

Fundamentally, we aren’t too dependent on the West since India happens to be a net importer. But for fund flows in terms of FDI and FII we definitely look to the West.

On RBI’s uptrend  prediction

Some consider the RBI move a big leap of faith while many industries are moaning. Dr. D. Subbarao has upped the ante in the battle against inflation by jacking up rates by an aggressive 50 bps. What’s more, the central bank doesn’t seem to be lowering its guard either.

It’s ready to sacrifice a little bit of growth in the near term to improve long-term prospects. A further 25-50 bps hike is not ruled out. Let’s hope for some big relief on the inflation front. The food inflation is high, global commodities are pricey too. The recent fuel price hike hurts. The string of subsidies also hides the correct picture.

On market direction

In the long run, markets are destined for an upturn. But I see range bound for most of this year with one big downside move still expected. The movement, as of now, is likely to be largely sideways.

Much will depend on the next monetary policy, outcome of quarterly results and monsoons.

Uncertainty results into higher volatility. With global markets under severe pressure on concerns about US and Europe debt higher volatility in global markets can’t be ruled out.

On good sectors for investment

Defensive and Pharma stock have historically been the best bets during falling markets.

Banking & financials, consumer​ goods, auto ancillaries and sectors thriving on consumption theme like pesticides, health care and education are good havens.

Capital for investment is individual specific but the investments need to be made in a staggered manner. Cement sector is currently under a cyclical downtrend. We recommend an ‘avoid’ on the sector. We are bullish on JSW Steel from a long term perspective.

On Mutual Funds

Even mutual funds invest across stocks. They don't offer secured returns but still it makes more sense to go for mutual funds instead of going for stocks as they are managed by competent professionals.

Go for diversified equity funds like HDFC TOP 200, Reliance Equity Opportunity fund, ICICI Prudential focused equity fund along with few balanced funds like HDFC Prudence, DSP Blackrock Balanced fund. You should also be looking for some debt funds like IDFC Super Save Income fund and SBI dynamic bond fund

On Forex and Gold

There’s no good or bad time to invest in forex markets. It’s the buy or sell position that may be turn out to be good or bad. Ideally look for calendar spreads or for policy announcements because at that point of time, the volatility is immense and you get a good trading range provided you have proper hedging in place.

Gold should be part of the portfolio though the exact allocation will depend on your objectives and risk-return. As a thumb-rule don't invest more than 15% in gold. Trading in either of Gold or silver is a risky venture though Silver is known to be more volatile. Remain invested in Gold for a longer duration.

On Gold ETFs

Gold bees trading on NSE seems the best bet .

On Specific stocks

Walt Disney’s growing stake in the Indian market

Indeed a good thing for the Indian market but the fact remains that India is now the hotbed of media and entertainment world and this specific development alone cannot dictate the market direction.

HDFC’s bounce back from recent short-term support level

 HDFC has found support at Rs 675. It has the potential to touch Rs 740 in the near term.

Hero Honda’s profitability surge in the context of market prospects 

One cannot jump to any conclusion about the market direction based on the Hero Honda results alone

Best bets in the current scenario

JSW Steel, Manappuram Finance, Tech Mahindra, Cipla, Aurobindo Pharma, Reliance Infra and Coal India. Bajaj Auto is for the long term. TCS is a better bet among IT stocks. DCB, SBI and PNB are good banking stocks.

On Standard Chartered’s downgrade of Colgate-Palmolive as UNDERPERFORMER

Colgate continues to dominate the oral care industry despite stiff competition from players like HUL and Dabur. However, higher ad spends and tax outgo (tax benefit for Baddi facility has reduced from 100% to 30%) is likely to put pressure on profitability. We maintain Market Performer rating with a 9-mth price target of Rs923.

On L & T Finance IPO

RoA and RoE have improved materially in the past two years for L&T Finance, driven by significant expansion in NIM and improvement in asset quality. Further, RoE is impressive at 18%. With valuation reasonable at mean 2.5x P/BV (pre-IPO), one can opt for the IPO.

  On Aditya Birla Retail in talks with Lawson

 Above 970, Adity Birla Nuvo could reach Rs1050 in the medium term.

On GE Shipping

Currently Baltic dry index (freight rate measurement) is still 80% below its 2007 peak levels. We avoid GE Shipping from a near term point of view.

On ADAG stocks

Most of the media companies are still running into losses. Better avoid the space. Telecom stock are expensive after the current run-up in stock prices, one should book complete profit if any.