We are not trading in n out. We are doing what We call Jesse Livermore (see quote). Will only sell on big squeeze!

STOCK IDEA FOR 31-5-16

Script Name	Trend		Closing price			Recommendations
Nifty Spot	UP		8178			Buy and buy
Nifty Future	Up		8194			Above 8230 more up side
Bank -Future	Up		17507			Holding above 17700.................
Axis Bank	Up		517			Decline to buy side with consider support 500
ICICI Bank	Up		40			Heading towards 250 257
Yes Bank	Up		1027			Above 1000 looks good
SBI	Up		197			Above 203 hot
BOB	Down		138			If not break 135.... Looks good
Reliance	Up		974			Buy on decline for target 1030
LT	Up		1498			Buy on decline
Tata Steel	Up		325			Holding above 310 looks good
Telco	Up		425			Today likely 10 percent up...............
HDFC	Up		1240			Buy on decline
LIC Housing	Up		471			Above 471 very hot
Can Bank	Up		194			Buy on decline
HPCL	Up		921			Now target 1000
Lupin	Down		1479			Time for consolidation
Sun Pharma	Down		818			Will it big down in today trade
Rel Capital	Up		417			Break out stocks
Bharti Tele	Up		355			Accumulate this stock
TCS	Up		2619			Above 2600 looks good
DLF	Up		125			Buy and Buy
Tech M&M	Up		548			Buy and buy

pick of the day 31-5-16

31-May-2016

PICK OF THE DAY	TARGET 1	TARGET 2	STOP LOSS
BUY STRTECH AT 92	95	97	89
FUTURES
BUY SKSMICRO FUT AT 655	669	680	647

TECHNICAL OUTLOOK 31-5-16

SCRIP	CLOSE	SUPPORT	RESISTANCE	OUTLOOK
NIFTY	8178.50	8080 8005 7940	8228 8285 8372	SUPPORT AT 8080
BANK NIFTY	17520.65	17335 17170 16820	17770 17900 18188	SUPPORT AT 17335
ITC	356.50	353 348 344	364 368 373	MILDLY BULLISH.
REL INFRA	545.95	528 505 496	553 565 578	MILDLY BULLISH.
VEDL	106.50	103 101 99	108 111 113	SELL ON RALLY.
TCS	2636.40	2605 2588 2555	2678 2707 2740	SELL ON RALLY.
SAIL	43.00	41 38 37	45 46 48	SELL ON RALLY.
SBI	198.85	195 190 184	204 208 215	MILDLY BULLISH.
DLF	126.50	124 121 117	133 136 140	SELL ON RALLY.
INFOSYS	1267.60	1245 1222 1205	1282 1313 1350	MILDLY BULLISH.
TATA MOTORS	421.25	413 402 392	432 444 456	SELL ON RALLY.
BHEL	120.70	118 114 109	125 129 132	SELL ON RALLY.
TATA STEEL	322.35	316 307 300	335 344 353	SELL ON RALLY.
WOCKPHARMA	931.70	905 887 858	945 969 982	SELL ON RALLY.
ONGC	213.45	209 204 200	219 223 229	MILDLY BULLISH.
ICICIBANK	244.50	235 231 226	248 253 261	SELL ON RALLY.
RELCAPITAL	414.30	401 389 381	421 433 441	MILDLY BULLISH.
RELIANCE	968.70	951 933 919	988 1001 1025	SELL ON RALLY.
HDIL	98.25	97 95 92	100 102 103	SELL ON RALLY.
MARUTI	4071.75	4038 3995 3960	4119 4141 4180	SELL ON RALLY.
HINDALCO	102.95	101 99 96	105 108 111	MILDLY BULLISH.
ACC	1537.15	1509 1489 1436	1577 1600 1637	MILDLY BULLISH.
LT	1478.10	1444 1395 1378	1505 1541 1588	MILDLY BULLISH.

technical outlook 30-5-16

SCRIP	CLOSE	SUPPORT	RESISTANCE	OUTLOOK
NIFTY	8156.65	8080 8005 7940	8228 8285 8372	SUPPORT AT 8080
BANK NIFTY	17511.80	17335 17170 16820	17770 17900 18188	SUPPORT AT 17335
ITC	359.30	357 353 348	364 368 373	MILDLY BULLISH.
REL INFRA	541.70	528 505 496	553 565 578	MILDLY BULLISH.
VEDL	102.80	101 99 97	107 109 112	SELL ON RALLY.
TCS	2572.65	2555 2525 2490	2605 2644 2678	SELL ON RALLY.
SAIL	42.70	41 38 37	44 46 47	SELL ON RALLY.
SBI	195.90	195 190 184	203 208 215	MILDLY BULLISH.
DLF	128.95	124 121 117	133 136 140	MILDLY BULLISH.
INFOSYS	1247.50	1222 1205 1189	1261 1282 1313	SELL ON RALLY.
TATA MOTORS	403.90	392 380 373	411 420 432	SELL ON RALLY.
BHEL	128.20	125 121 118	132 135 140	SELL ON RALLY.
TATA STEEL	329.60	316 307 300	335 344 353	SELL ON RALLY.
WOCKPHARMA	926.65	905 887 858	945 969 982	SELL ON RALLY.
ONGC	213.00	209 204 200	219 223 229	MILDLY BULLISH.
ICICIBANK	243.15	235 231 226	248 253 261	SELL ON RALLY.
RELCAPITAL	414.00	401 389 381	421 433 441	MILDLY BULLISH.
RELIANCE	974.70	951 933 919	988 1001 1025	SELL ON RALLY.
HDIL	98.60	97 95 92	101 103 106	MILDLY BULLISH.
MARUTI	4146.60	4119 4075 4020	4180 4220 4260	MILDLY BULLISH.
HINDALCO	91.90	90 87 85	94 95 97	SELL ON RALLY.
ACC	1522.95	1509 1489 1436	1540 1577 1600	MILDLY BULLISH.
LT	1474.90	1444 1395 1378	1505 1541 1588	MILDLY BULLISH.
L

pick of the day 30-5-16

30-May-2016

PICK OF THE DAY	TARGET 1	TARGET 2	STOP LOSS
BUY INDIGO AT 1025	1055	1075	1015
FUTURES
BUY ACC FUT AT 1525	1555	1575	1511

India : How many banks are swimming naked?

On 2 October 2014, Prime Minister Narendra Modi launched Swachh Bharat Abhiyan—India’s biggest ever cleanliness drive. Around three million government employees and students of schools and colleges participated in the event to clean the streets, roads and other infrastructure in Asia’s third-largest economy.

A year later, Raghuram Rajan, governor of India’s central bank, steered a similar drive to clean up the balance sheets of the country’s commercial banks. In the five months between August and December 2015, the Reserve Bank of India (RBI) inspected their loan portfolios with a toothcomb and asked them to make provisions for three types of assets: non-performing assets, or NPAs, that were earlier not recognized by them; loans given to various projects, where the dates of commencement of commercial operations have passed but the projects have not yet taken off; and loans which have been restructured. The banks were given the freedom to make provisions in two phases for the December and March quarters of fiscal year 2016, at least 50% each.

Here is the result of this:

Barring one, Dhanlaxmi Bank Ltd, all listed banks in India had announced their earnings for fiscal 2016 by Friday. In the March quarter, 15 out of 25 public sector banks announced net losses. As a group, the public sector banks posted Rs.23,493 crore loss against a net profit of Rs.8,500 crore in the year-ago quarter. Not a single private sector bank posted a loss in the quarter even as their collective net profit dropped 14%—from Rs.10,254 crore toRs.8,807 crore. Comparable data for India’s newest bank IDFC Bank was not available. Overall, 38 listed banks posted a loss of Rs.14,686 crore against a net profit of Rs.18,754 crore in 2015 March quarter.

Punjab National Bank (PNB) led the pack of money-losing lenders with a Rs.5,367 crore net loss in the March quarter, followed by Canara Bank (Rs.3,905 crore), Bank of India (Rs.3,587 crore), Bank of Baroda (Rs.3,230 crore), Syndicate Bank (Rs.2,158 crore), IDBI Bank Ltd (Rs.1,736 crore), and Uco Bank (Rs.1,715 crore). The loss would have been higher for many of them had they not got the benefit of tax writebacks.

Many of the public sector banks have posted losses for two successive quarters and, as a result of this, 13 of them ended the fiscal year with net losses; nine of them have reported profits, but their earnings in the year ended 31 March are lower than what they had recorded in the previous fiscal. Only three state-run banks reported a rise in net profits. Bank of India’s annual loss has been Rs.6,089 crore and that of Bank of Baroda, Rs.5,396 crore. Among the private banks, barring three, all have posted higher net profits in 2016 compared with the previous year.

The reason behind the hefty losses for many and a sharp drop in profits for others is higher provisions—the money they had to set aside to take care of their NPAs or bad loans. Data collated by Ashwin Ramarathinam ofMint’s research bureau shows the pile of provision made by the banking system has risen 87% in 2016—fromRs.93,698 crore to Rs.1.75 trillion. Both private and public banks have been aggressive in making provisions, and yet most private banks were able to make decent profits because they continued to earn higher interest income as well as fee income—something which their rivals in the public sector have not been able to do. I am dealing with that issue a little later.

The gross bad loans of these 38 listed banks rose 95% in one year—from Rs.3.09 trillion to Rs.5.8 trillion. Of this, in the March quarter alone, bad loans rose by almost Rs.1.5 trillion, after adding close to a trillion rupees worth of bad assets in the December 2016 quarter. The public sector banks account for around 90% of the bad loans, although their market share of banking assets is around 70%. State Bank of India’s gross bad loan is close toRs.1 trillion. Punjab National Bank comes a distant second at Rs.55,818 crore, followed by Bank of India atRs.49,879 crore and Bank of Baroda at Rs.40,521 crore.

After setting aside the money, the net bad loans for this set of listed banks more than doubled in 2016—fromRs.1.67 trillion in fiscal 2015 to Rs.3.38 trillion. Here too, the public sector banks’ share is more than 90%.

In percentage terms, for many public sector banks, the gross bad loans more than doubled during the year. For Uco Bank, it rose from 6.76% to 15.43%; that of Bank of India, from 5.39% to 13.07%; and Bank of Baroda—from 3.72% to 9.99%.

Overall, 14 of 25 public sector banks now have gross bad loans of at least 9% and up to 17.4%.

Among private banks, ICICI Bank Ltd is the only entity which has more than 5% gross bad loans (5.82%). After making provisions, 15 state-owned banks have at least 5% and up to 11.89% net bad loans. In the pack of private banks, three have between 2.35% and 2.98% net NPAs.

Even after declaring bad assets and providing for them, the private banks could make profits because most of them continued to lend money and earn interest income besides fee income. This is not the case with the public sector banks. In the March quarter, the public banks’ net interest income actually dropped 2% from a year earlier while private banks net interest income rose 21%. For 2015-16, net interest income of public sector banks rose only marginally—from Rs.1.9 trillion to Rs.1.94 trillion—while private banks posted 21% growth in their net interest income in the entire year.

This is the most worrying aspect of bank earnings in fiscal 2016. Scared of piling up bad assets, many public sector banks have stopped giving loans and started shrinking their balance sheets. While, collectively, the loan book of 13 listed private banks has grown 22.40% in 2016, that of 25 public sector banks has grown 2.73% and at least eight state-owned banks have shrunk their loan books. Uco Bank’s loan portfolio has shrunk by 15% and that of Bank of Baroda, more than 10%. Bank of India, Indian Overseas Bank and a few others feature in this list.

This is a vicious cycle. Once a bank decides not to give fresh loans fearing rise in bad assets, its interest income shrinks and that hits its profitability and ability to provide for bad assets.

Even though both the government and the Reserve Bank of India have put up a brave front and claim that all is well on the capital front, quite a few Indian banks will soon face the music. Since they are not making profits that could be ploughed back to bolster their net worth, they will not have enough capital to be able to lend. As on 31 March, 25 listed public sector banks had Rs.55.4 trillion of loans on their books, and about 10% of the amount, about Rs.5.3 trillion, are gross bad assets. Once we add the restructured loans and those loans that had been written off, the total stressed assets could be at least 20%.

The key question here is: is the worst over for Indian banks?

There is no unambiguous answer. State Bank of India boss Arundhati Bhattacharya has given us a clue to interpret the status. Announcing the bank’s earnings last week, she said her bank has identified and keptRs.31,352 crore worth of risky loans on a “special watch”.

As much as 70% of these loans could end up becoming bad, but if the economy improves, then only 30% could turn bad.

Many have been taking heart from the fact that Indian banking system had gone through worse period in early 1990s when bad assets were even higher. If it could pull it off then, why worry now? Looking back at early 1990s will surely make us feel courageous, but it may not be an ideal comparison. The risk is far higher now as the banks’ exposure to loans is much more than what it was in the early 1990s, with the reserve requirements steadily coming down.

Indian Banks : Just see GNPA Numbers =Rs 5.7 trillion as of 31st March

-Publicly traded banks in India have just endured the worst six months since March 2001.

-They reported the fastest accretion of bad loans, mounting provisions and loss of capital in the two straight quarters ended 31 March as the country’s central bank forced the lenders to adequately disclose soured loans and set aside more money to cover them. As a result, aggregate profit of 38 listed banks that have reported their earnings so far fell by 66% for the year ended 31 March.

-Gross non-performing assets of the 38 out of 39 listed banks stood at an unprecedented Rs.5.7 trillion as of 31 March, as lenders added a trillion rupees worth of bad loans in each of the quarters ended December 2015 and March 2016, according to data compiled by Capitaline. Dhanlaxmi Bank, the only listed bank that has not reported its earnings, is scheduled to announce its results on Monday.

-Bad loans in the Indian banking sector surged 60% between October and March and aggregate loan disbursal in the period expanded by just 4%.

-The clean-up drive has resulted in deep losses for 13 out of the 38 lenders. State-controlled banks fared the worst, reporting an aggregate loss of Rs.15,064 crore for fiscal 2016. The private sector banks reported a slower 6.46% profit growth.

-Indeed, much of the pain was felt in the fiscal fourth quarter, when the public sector lenders reported an aggregate loss of Rs.23,493 crore and their private sector counterparts reported an aggregate profit ofRs.8,807.48 crore—a 14% decline from the year earlier.

-The country’s largest lender, State Bank of India (SBI), too is cautious on asset quality.

–Chairman Arundhati Bhattacharya said the lender has identified Rs.31,352 crore worth of risky loans and kept them on a “special watch”.

The bank, following a conservative approach, expects 70% of these loans to slip into the bad loan category. The banking behemoth’s net profit for the quarter ended 31 March 2016 dropped 66% to Rs.1,263.81 crore as its pile of bad loans swelled to Rs.98,173 crore.

Good trading is just like Surfing

20 Commandments for Beginning Traders

Market Review for 30 May 2016

Nifty (8157) we said next logical technical target is 8086-8139… crucial support 7960’ the market climbed up as expected and closed beyond 8139…technical  the next logical technical targets in the days to come is 8243…strong support is at 8000

The support for the Nifty is at 8000 and the resistance to the up move is at 8243

Nifty Spot -Triangle Says 8240 ,Box Chart Indicates 8336-8429.Unexpected level on 16th Trading session.

3 Consecutive close above 8062…………………(Is must )+Weekly close

Will take to 8336—————-8429 level.

7700 is Now Rock Solid Support (Something unexpected in world market if happens then only we will break this level )

Bank Nifty-16300-16400 (Rock support ).Heading Towards 18000-18300-19000

Above 17161 level………………….3 Consecutive close +Weekly close 

Target :18029——————-18300++

Now ,Consider 16300-16400 as Base or Rock support for Bank Nifty

If this is the case……………..It means any Rate Hike in US will not have any impact here.

It means :RBI ……………………Rate cut on card + Next quarter Bank Results may be more Mind blowing ?

Let’s see……………Trade with eyes open :Nothing else.

ALERT-G7 Summit: Japan’s Abe warns of another Lehman-strength crisis

The Nikkei reporting a presentation made by PM Abe at the G7 26 May 2016

Nikkei are reporting that Abe also warned the G7 of a crisis on the scale of Lehman Bros. At the meeting he has shown that commodity prices have fallen 55% since 2014, the same margin they fell during the global financial crisis.

Seems to me that Abe is increasingly trying to get the G7 to bail him out and to avoid raising the sales tax next year.

Shakespeare On Investing

 “Wisely and slow; they stumble that run fast.” (Romeo and Juliet)

All throughout history we have heard of the triumph of the tortoise over the hare and the mantra that slow and steady wins the race. Shakespeare reminds us of this wisdom and we contend that this mantra is one of the most critical elements of successful investing. Executing a consistent investment plan and process over time is the key to wealth preservation and growth, and we believe that lower volatility strategies (avoiding the stumbles)will generate the highest long-term returns. Higher volatility investments (those that run fast) will have short bursts of outstanding performance, but tend to experience higher frequency and severity of downturns.

The mathematics of loss is not kind to the hares. If you lose (10%), you have to make 11% to get even; lose (20%), you have to make 25%; lose (50%) and you have to make 100% just to get your capital back. Investing in a low volatility strategy requires patience, and Shakespeare had some thoughts on that as well. 

“What cannot be preserved when fortune takes, Patience her injury a mockery makes?” (Othello)

Great investors understand the value of patience and follow a disciplined approach. They stay the course, even when going through difficult periods (when fortune takes) and redouble their efforts to remain disciplined when the strategy is out of favor. Great investors know that good strategies (and good investments) will play out well. When the only thing that has changed is the price of an investment, it is time to increase the position, not sell it, and patience will be rewarded over time as the price comes back to reflect the true underlying value. Patience is also necessary in executing long-term focused investment approaches like the Endowment Model. 

“Well, God give them wisdom that have it; and those that are fools, let them use their talents.” (Twelfth Night)

The gifts of wisdom, insight and perspective come from accumulated experience, diligence and plain old hard work. Those that chose the easy (foolish) path to riches, get what they deserve. This preference for the easy path is why the average investor under performs the averages (and the Endowments) by such a large margin. The real challenge is that long time horizon investment strategies are not exciting. 

“Life is as tedious as a twice-told tale, vexing the dull ear of a drowsy man.” (King John)

Good investing is boring. Paul Samuelson said, 

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

George Soros also has a view on the excitement of investing, saying 

“If investing is entertaining, if you’re having fun, you’re probably not making any money.”

In the spirit of this letter, if you want entertainment, go to the theater. 

“Things sweet to taste prove in digestion sour.” (Richard II)

It is a general rule (with some exceptions) that what is good for you tastes bad and what is bad for you tastes good. The same rule applies to investing. When you make an investment that makes you feel good (sweet to taste), you will likely lose money (sour in digestion). Conversely, when you make an investment and you feel badly (sour to taste), you will likely make money (sweet in digestion). I used to say that a great investment advisor’s job was to maximize the discomfort of the client/board by constantly making good but difficult decisions that make you sick to your stomach, but then I realized that if you maximize discomfort, they get rid of you because you are an irritant.

So the real trick is to optimize their discomfort, keep them uncomfortable enough to make good investments, but not so uncomfortable that they fire you. In other words, slip a little sugar in with the vegetables every now and again. Another area where comfort is a problem is fees. 

“But the comfort is, you shall be called to no more payments, fear no more tavern-bills.” (Cymbeline)

The jailer says to the prisoner to look on the bright side that he no longer has to pay his bar tab, but we would say that is a bad trade. Applying the same logic to the markets, if a stock you own falls a lot, not having to pay taxes also seems like a bad trade. We believe that paying taxes (and incentive fees) is a good thing, because it means you have gains.

Contrary to the cult of Bogleization, you want to maximize fees in investing (not minimize them) so long as the bulk of them are incentive based. In what business does the best person charge the least? 

“You pay a great deal too dear for what’s given freely.” (Winter’s Tale)

You always get what you pay for, free advice is usually very costly, and free money is more costly still. When all companies are propped up by abundant credit, value destructive behavior will occur and the price paid later will be much higher than anticipated. Never invest on a stock tip and be wary of investment opportunities where the fees are below average, as you must ask yourself why would someone charge below market rates for their expertise?

Groucho Marx famously quipped, 

“I would never join a club that would take me.”

The best managers don’t need (or even want) your money and gaining access to them is priceless (like buying them when they have their second worst quarter ever in Q1). So on the subject of investing, a simple summation. 

“No profit grows where is no pleasure ta’en.” (Taming of the Shrew)

Shakespeare is imploring us to always love what we do as there is little to be gained in partaking in things we have no interest in. What I love most about the investment business is that it is constantly changing, evolving and is something that can be engaged in for an entire lifetime. That said, the very best part is that you actually get better (contrary to many endeavors) as you get older and wiser (where wisdom is defined as learning from mistakes).

As my manager friend Bill Duhamel says, 

“With every investment we get richer or wiser, never both.”