MY TRADES

BEST STOCK PICKS OF RAKESH JHUNJHUNWALA

Rakesh Jhunjhunwala is called India’s most successful investor. There is a craze in the investor community to buy into stocks in which he has a stake. The recent correction in the markets has taken Nifty close to its 200DMA. The 200DMA is often reckoned the strongest support level of a bull run. As such, at the current levels there is an opportunity to buy. In this article we list out some of the best picks of Rakesh Jhunjhunwala which investors can buy in this correction.

Titan Company:
Rakesh Jhunjhunwala has 8 crore shares of Titan, which constitute 9.05% of the total market capital of Titan Company. Rakesh Jhunjhunwala’s first brought in 2002-03 at an average price of Rs.5. The stock then rose to touch Rs 80 but later fell to Rs 30. The big bull had long term plans and did not sell a single share.  Today, the stock hovers around Rs.400. Historically; Titan has always given good returns over the years. Fundamentals of the company are strong. In the last decade Titan has revolutionized the jewellery and watch segment by bringing class and style into the jewellery and watch segment. Titan is one of the very few world class brands that have been made in India.  Titan is India’s largest manufacturer of quartz watches and has a dominant 60% market share in the Indian market.  It is the world’s sixth largest manufacturer of branded watches. It has successful brands like Fastrack, Nebula, Sonata, Titan Raga and Octane. Titan also has the rights for the marketing and distribution of Tommy Hilfiger and Hugo Boss watches. Speaking about Titan, Rakesh Jhunjhunwala said that India would grow at 7 and 8 per cent and that demand for FMCG and consumer durables would see strong growth. As per Rakesh Jhunjhunwala the current Rs.45000 crore Indian jewellery market was roughly Rs 45,000 crore would see enormous growth in the years to come. Titan having 55 to 60 per cent market share of India’s organized watch market is bound to prosper supported by its jewellery business.

Lupin:
The Second largest holding in Rakesh Jhunjhunwala’s portfolio is Lupin. Rakesh Jhunjhunwala started investing in this stock when it was trading at around Rs. 49. Currently, he has around 80 lakhs shares which comprise 1.76% of Lupin shares. His investment in Lupin has a market capitalisation close to 700 crore.  He has been holding the stock for the last 11 years. At the current market price of 1750 the return has been more than 1000% after adjusting for bonus and split.  Lupin has presence in more than 70 countries. The company is engaged in the development of the APIs, generic and branded formulations.  Lupin is the largest manufacturer of Tuberculosis drugs in the world.  It has remained one of the country’s top Pharma companies over the years. The company has done great work in research and development. It has been successful in new product launches and has been very aggressive in entering into new geographies. It has an advanced biotechnology program and expanded Novel Drug Discovery and Development pipeline to grab future opportunities. Lupin has been a great stock for the long term investors over the years and still making new highs.

CRISIL: 
CRISIL is at Number third position in Rakesh Jhunjhunwala’s portfolio as far as weightage is concerned. Currently he is holding 40 lakhs shares of CRISIL which has a valuation of Rs.444 crore. His holding is around 5.67% of the share capital of CRISIL. The stock has been a part of Jhunjhunwala’s portfolio for a long time. Currently the market capitalisation of his investment is 6,532 crore. Crisil continues to be a good performer investments in the stock ensure good returns in the long run. The company is India's leading ratings agency. It provides high-end research to some of the world's largest banks and leading corporations. Its majority shareholder is Standard & Poor’s, one of the  world's foremost rating provider of independent credit rating, risk evaluation and investment research. The company operates in three segments - Ratings, Research and Advisory. Over the years, the company has rated more than 60,000 entities in the country.
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MARKET SOLD-OFF : STOCK TO WATCH FOR !!!

The market has sold off heavily in the last few sessions.  However, as an investor this is an opportunity. Here are some cool stock ideas to invest now.

1. Lloyd Electric And Engineering Ltd
This is purely a trading call. With the summer approaching the stocks of the companies which deal with ACs will see an upside. Lloyd is bound to benefit in such a case. If we look at the valuations then also the stock is a good pick. The stock has an EPS of 21.54 and valuations are cheap considering a P/E of 8.21.  Lloyd Electric can see targets of 200 soon if not more. In this market where most stocks are trading way below the 10 DMA, this is one stock which is trading above that. It just shows how much strength the stock is having at this moment. I was seeing the Advertisement on ‘Lloyd AC wale hamesha khus’. It reflects that the company is into the strong marketing mood and that may help in the company to gain more market share. 

2. Titan
When one talks of long term, Titan is a top pick. It has always given good returns. In the last decade Titan has revolutionized the jewelry and watch segment. It has brought class and style into the jewelry and watch segment. In fact Titan has been one of the very few world class brands that have been made in India.  Today it is India’s largest manufacturer of quartz watches and has a dominant 60% market share in the Indian market.  Titan has also emerged as the world’s sixth largest manufacturer of branded watches. It has also been successful in creating brands like Fastrack, Sonata, Nebula, Titan Raga and Octane. Titan has also acquired a license for the marketing and distribution of Tommy Hilfiger and Hugo Boss watches. It also got several accolades for its tremendous performance. It may be worth mentioning here that the Titan stock has been one of Rakesh Jhunjhunwala’s favorite stocks and as played a major role in making him the big bull.  It is very difficult to give a target for this stock as whenever I gave targets, the stock went beyond that. It’s always a buy!!!

3. United Phosphorus
UPL is the largest producer of Agrochemicals in India. It is also amongst the top five post-patent agrochemical manufacturers in the world. As India is an agro based economy United Phosphorus continues to have good prospects. It offers a wide range of products and has developed more than 100 insecticides, fungicides, herbicides, PGR and fumigants. UPL also manufactures plant growth and regulatory like Saaf, Doom, Samar, Jhatka, SaathiI, Renova and Ratol. It also has a strong global presence and has a customer base in over 100 countries. It has subsidiary offices in countries like Argentina, Brazil, China, Canada, France, Hong Kong, Japan, Korea, Mauritius, Mexico, New Zealand, Taiwan, South Africa, USA and UK. The UPL stock has shown good appreciation and remains a top pick.

4. TFCI:
Fundamentally, TFCI has always a good company. It primarily provides financial assistance to tourism-related projects. It has also started lending to other sectors such as real estate, infrastructure and paper recently. However, what makes it a buy now is the technical breakout of a long term trend. It has broken the long term range recently and after that rallied all the way to 95. At the current levels the stock is consolidating, but once it breaks out the previous high can be breached. It has lots of factors going in its favor like strong capitalization level, low gearing, comfortable liquidity profile and sustained profitability with an increase in Interest spreads. 

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CHARTS

Charts are often considered as the backbone of technical analysis. Charts reveal a lot of information in a small time. They give information about the movement in the prices of the company’s shares over a span of time.

Charts also give signals that a trader can analyze to predict the movement in share prices in the future.
There are two types of patterns: reversal and continuation. A reversal pattern signals that a prior trend will reverse on completion of the pattern. Conversely, a continuation pattern indicates that the prior trend will continue onward upon the pattern's completion. By analyzing charts a trader can get essential information regarding which pattern a stock price is going to follow.

However, charts are not a formula that can predict the movement in share prices in the future an exact science. It is not a necessity that the prices move exactly in pattern suggested by the chart. To confirms charts other aspects of technical analysis should be considered like volume and RSI.

Types of Charts
Line charts: This is one of the most popular types of charts that are used for analyzing stock prices. Line charts can be read and understood very easily. In this kind of charts the stock’s closing prices over a specified time frame are connected. In the case of daily charts the closing price for each day are plotted and connected by a single line. For weekly charts the closing price for each week is used for plotting while in case of monthly charts the closing for every month is used for plotting. The line chart has certain limitations as it does not provide too much of technical indications that can be used for predicting future price movement. Except for the closing price there is not much of information that can be read.

Bar Charts: These charts contain vertical bars that represent a particular period of time. The length of the bar indicates the variation of the price in that period with the top part showing the highest price and the bottom part showing the lowest price. There are two small horizontal lines projecting from the bar lines. The line on the left indicates the opening price while the small line on the right indicates the closing price of the period. These charts are also known as the OHLC charts as information regarding the open (O), high (H), low (L) and close (C) can be read from them. The bars in the charts can also be colored red or green. It the bar of a period sees price appreciation than its previous bar it is colored green and if the bar has seen price depreciation than its previous bar it is colored red. The bar conveys a lot of information and is an essential tool for technical analysis.

Candlestick charts:  These charts originated as a form of Japanese charts. There are very much similar to bar charts. The solid bar on is the price difference between the opening and closing prices. The lines on which these bars lie show the difference between the highest and lowest prices. A candlestick generally reflects the price pattern for a specific time period which it describes. When it the closing price for a period is lower than the previous the color of the candlestick bodies is black or red while in case the closing price is lower than the previous period the color of the candlestick is white or green. The accumulation of number candlesticks gives rise to patterns which are used to describe certain movements in the stock market. A stock which opened near its low and closed near its high, is denoted by a green body with short shadows while a stock, which opened near its high and closed near its low, is denoted by a red body with short shadows. The candlestick charts are one of the best charts that can be used for technical analysis. This chart shows various patterns which can be very useful to predict the stock price patterns in future.

Importance of charts
Charts when analyzed properly can use to predict the future movements of the stock prices by studying the patterns which they indicate. They can be used to decent analysis of stock prices and anticipation of the future price trends can be done. The importance of charts also lies in the fact that they give an overall view of the stock prices and helps the investor to get some information regarding the stock before investing in it.


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INVESTING IN PENNY STOCKS

High risk, high rewards… This is what penny stocks are about. Indeed the safe investor chooses to ignore the class of penny stocks, but the risky trader knows that there is a case for earning 100% in a penny stock in a short time but not in a blue chip like Reliance.  In simple terms a penny stock is a stock which trades at a very low price usually below Rs 10. The term originated in the US and was used for stocks below $5. About 25% of the stocks on BSE and 10% of the stocks in NSE trade below Rs.10 and can be considered as penny stocks. Most penny stocks have been put under the trade-to-trade category so as to avoid speculative activities. Many of the stocks are also included in the B group category on BSE. 

The Risks of Penny Stocks
Price manipulation is the biggest risk while investing in penny stocks. The low prices make manipulation easier as a small investment can easily trigger a spike.  As such manipulators can push prices and trap the retail investor. For example, a Rs 2 stock can be easily rigged to Rs 5 giving a 150 per cent return. Such a return draws the attentions of the retail investors. Once they start entering, the manipulators start selling. Thereby a crash occurs and the small investors are left in the lurch. Often the manipulator spread false rumors about the company to propel the prices and this too traps the small investors who are drawn to the stocks.
Another problem with penny stock is the difficulty in finding legitimate information about the company. Most brokerages do not research on penny stocks. Again, it is seen that many a time manipulators spread false rumors about these companies to rig the stock prices.
It has also been found that the companies whose stocks are considered as penny stocks often violate the rules of the exchanges. In order to avoid this, many a times the stock gets suspended from exchanges and the investors are left at nowhere.

The Returns on Penny Stocks
As penny stocks are available at low prices they entice many investors, particularly first-time investors to explore the markets, without risking an extensive amount of money. If the stock prices fall the investors are saved from losing excessive amounts of money.
Penny stocks can easily become multi-baggers by rising. A penny stock trading at Rs 5 can reach levels of Rs 50 in less than a year.  It is not uncommon for some penny stocks to double or triple in price in extremely short periods of time, but this is not possible in case of blue-chip stocks. One can find it difficult to believe that an ICICI Bank can give a 10 times return in even 5 years.

Tips for buying Penny Stocks
Fundamental factors like corporate governance, the potential of the business and the management of the company should be considered when investing in penny stock. It is recommended you to buy the stocks of those companies while have a high promoter stake.
While selecting penny stocks keep a watch on the trading volume. If you trade with stocks that are trading with low volumes, it could be difficult to get out of your position. As such, it is advisable to trade in penny stocks that have a good deal of liquidity.
Analyze the details of the companies well. If you think a company is good, but due to some temporary setback the stock has been hammered you can invest.  For example a few months ago stocks like GMR Infra, Suzlon and GVK Power were available at very low prices. Such prices offered good opportunities for the investors.
Do not invest in penny stocks on the basis of speculative actions.
Do not buy a penny stock on the basis of the stock prices in absolute term. You should access whether the stock is undervalued or overvalued on the basis of fundamental indicators like price to earnings the company is generating, growth, assets, dividends, etc. 
 Like any investing venture, you must do your research and your homework before making any financial decisions. Stock price itself should not be the sole factor on which to make this decision. It is no indicator of past or future performance of a company.
Try to invest in penny stocks that have a long term growth story in them. In such cases you must hold the investment for years and allow the story to play out and the stock to appreciate in value. 
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HEAD AND SHOULDERS

HEAD AND SHOULDERS
The head-and-shoulders is one of the most popular and reliable chart patterns in technical analysis. As is evident from the name the pattern looks like a head with two shoulders. It is a bearish pattern that signals the substantial fall of prices after a dip and a rise. The pattern starts with a peak called the first or the left shoulder that is followed by a dip. Then there is another peak, which extends beyond the earlier peak, which is called the head. It is followed again by a dip till the levels of the early dip and then there rise that is now called the second shoulder. The level where the dip extends is called the neckline. So there are four main parts of this pattern: two shoulders, a head and a neckline. The pattern is confirmed when the neckline is broken, after the formation of the second shoulder. The neckline is considered as the region of support and the breakdown of the neckline the security is said to have entered bearishness.

 INVERTED HEAD AND SHOULDER
In case of the inverted head and shoulder the formation is exactly a horizontal mirror reflection of the head and shoulders. This is a pattern signal a security's price is set to rise after a period of a downward trend. This pattern too has four parts.  It starts with the formation of the left shoulder, which occurs when the price falls to a new low and rally to a high. The head is formed in the second step when the price moves to a low that is below the previous low, followed by a return to the previous high. This move creates the neckline for this pattern. The third step is the formation of the right shoulder in which the prices move to a low that is higher than the previous one but returns to the neckline. The pattern is complete when the price breaks above the neckline.

OTHER POINTS
Breakout or breakdown in volumes
Like every aspect of technical analysis volume plays an important role in this chart pattern also. High volumes signal lot of participation and money movement. In both head-and-shoulders and inverted head-and-shoulders pattern, volume is used mainly at the point of breakout or breakdown from the neckline is extremely important. 
 For a head-and-shoulders, when the price breaks below the neckline with a large volume it signals heavy selling. It indicates that the underlying supply and demand in the market is moving in the same direction the chart pattern is suggesting. Similarly, in case of inverted head-and-shoulders when the price moves above the neckline with a large volume it confirms the bullish trend.
Slope of the Neckline
Another key factor in the head-and-shoulders pattern is the formation of the neckline. The neckline is important as it acts as support or resistance during the formation of the pattern. However the neckline may not be a straight horizontal line. In case of head and shoulders, a flat or slightly upward-trending neckline signal strength while in case of inverted head-and-shoulder a flat or slightly downward slanting neckline signal strength.


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TRENDS

Trend in simple words means the mood of the stock. It is basically the behaviour of the stock in terms of its price movement over a period of a time.

Trends can be of 3 types:
Uptrend-It is the tendency of the stock to reach higher price levels with bullish outlook.
Downtrend- It is the tendency of the stock to reach lower price levels with bearish outlook.
Sideways-It is the tendency of the stock to remain relatively stable at a price level with lack of movement in any direction.


Trendline
Trendlines are lines that are used to determine the trend of a stock. It is a line drawn connecting crucial price levels like supports and resistances. A minimum of two such points are needed to draw a trendline. These lines can be extended to determine the price levels where the stock prices can have impact in future.

Duration of Trend
Based on the time taken for the trend to form trend can be divided into 3 categories:
1. Major Trend: These are also known as long term trends and they are formed in time spans of many years.
2. Minor Trend: These are also known as intermediate trends and they are formed in time spans of months.
3. Micro Trend: These are also known as short term trends and they are formed in time spans of weeks or days.

Trend confirmation
Trend can be confirmed by taking into account various technical indicators like volume, MASD and RSI. Volume is one of the most popular indicators. Movements which are supported by high volumes show the huge strength with volumes indicating huge participation while movements with less volumes show lack of conviction in the trend.

Importance of Trend
Trend is one of the most important parameters used by traders and investors to build or exit positions. It helps in finding the directions of stock and the markets as a whole and hence gives investors and traders idea on how to approach with positions. Successful traders and investors often use the idea of “Trend is my friend” when approaching markets.


Uptrend
When a stock tends to move with rising price levels through the formation of a series of higher highs and higher lows it is said to be in an uptrend. Connecting the price levels of higher lows gives an ascending line and it can be extended to form a support line where the stock may find support in future. As long the price levels sustain above this line the uptrend is said to be intact and breakdown of the price levels below this line causes a breakdown and the trend is said to be reversed.

Downtrend
When a stock tends to move with falling price levels through the formation of a series of lower higher highs and lower lows it is said to be in a downtrend. Connecting the price levels of lower highs gives a descending line and it can be extended to form a resistance line where the stock may find resistance in future. As long the price levels sustain below this line the downtrend is said to be intact and breakout of the price levels above this line causes a breakout and the trend is said to be reversed.

Sideways
Sideways movement in a stock is said to occur which there is lack of trend in a stock and the price levels seems to have more or less settle down in a narrow range. The price movement is restricted to a this range for some time and once there is a breakout or breakdown out of this range the trend gets established as uptrend or downtrend respectively.
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