INDIAN STOCK MARKETS

INDIA-STOCK MARKET : ACCORDING TO MY LAST WARNING, HOPE YOU HAD SOLD OUT COMPLETELY. NOW WATCH THE MARKET CAREFULLY. START BUYING ON FALL OF 10%

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This is a Psychological Techno - Fundamental Decision Support System


***AIM :: TO PREVENT LOSS TO SMALL INVESTORS AND MAKE 30% to 40% GAIN ONLY



(Produced by Colonel John Chenetra (MBA).VICE PRESIDENT (HINDUJA GROUP - INDUSIND MEDIA & COMMUNICATIONS LTD)

NO MOTIVE OR DESIRE FOR PERSONAL GAINS

The sole aim of this website is to prevent the slaughter of the "Small Investor" in the "Indian Stock Markets" mainly caused by the manipulation of "Large Operators" and misinformation spread by some elements in the "Media"




HIGHLIGHTS
* Free service hence high level of objectivity
* Based on in depth research
* Conscious effort to be simple & to avoid technical jargon
* Brief and self explanatory
* Assist commoner make informed rational decisions
* Give level playing field for rich and poor
* Special Portfolio Advice to assist NRIs whose funds can help India grow rapidly.
* INVESTMENT AIM IS ONLY TO MAKE ONLY 30% to 40% PER YEAR (NOT MAXIMUM PR%OFITS)

*NOTE 1- This site "psychologically conditions" you & coaxes you to take "rational decisions." It is strongly recommended that all topics be visited in sequence before giving buy & sell orders.

*NOTE 2- This site is purely advisory in nature and does not take any responsibility for any gains or losses caused to investors who are advised to take collect information/advice from all sources and then take their own decisions. This reflects only an individual's opinion




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ADVICE FOR THE MONTH
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PREVIOUS RECOMMENDATIONS namely Cement (ACC, GRASIM) Fast Moving Consumer Goods(ITC,HLL),Information Technology (TCS, INFOSYS, WIPRO) Tata Power, RELIANCE, BHEL, ONGC, RIL, L&T, Ranbaxy etc as a basket must have given you a gain of almost 26.5%. (This is great return. Actually it works out to an "anual gain" of more than 260%)

I am now recommending BOOKING PROFITS now around a gain of only 15 to 16.5%(This is a change from the "LONG TERM STRATEGY" given in the STRATEGY SECTION - of booking profits only after an over all gain of 30%). This is because of three reasons - FIRSTLY the risk - reward is pointing towards a high risk situation - SECONDLY - the high interest rates are going to affect the profitability of most companies and THIRDLY - with the high interest rate of 10% the debt instruments like FIXED DEPOSITS & DEBT MUTUAL FUNDS will give a further risk free return of 10% to 13% (which gives you an anual gain of almost 23% to 25%) This is more than enough for most people- SO WHY TAKE A RISK

***BUY NOTHING NOW


***SELL EVERY THING



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STRATEGY(Building a Portfolio & Booking Profits)
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(STEPS IN A NUTSHELL)

1. BUYING - Wait till SENSEX falls to its 2 year average and buy in 5 lots (at every rise) after a fall of 10%.
2. SELLING - Overall the basic aim is to have sold half the portfolio when it has given a gain of 30% and to sell half of the balance at every further rise of 10%. THIS REQUIRES DISCIPLINE AND CAN BE A COSTLY MISTAKE AS THE MARKET TIME & AGAIN HAS PROVED THAT IT IS UNPREDICTABLE AND CAN FALL RAPIDLY LEAVING INVESTORS LEFT WITH REGRET. Two ways of achieving this is given below.

NOTE - Look up the “MODEL PORTFOLIO” at the end & watch & build it over a period of time.

STRATEGY IN DETAIL

1. Having booked profits recently you should not invest immediately. Enjoy your profits for a while.
2. Patience is the most important quality in the stock markets.
3. It is a good idea to take out 50% of the profits you have made and buy other assets like a house or some land in a growing city like Pune, Bangalore, Hyderabad etc
4. START BUYING ONLY WHEN THE SENSEX HAS ATLEAST REACHED THE 3 YEAR AVERAGE. Buy only shares from industries where India has core competence like SOFTWARE, BIO-TECHNOLOGY, FMCG, PHARMA, TEXTILES, ENGINEERING, INFRASTRUCTURE etc.
5. Buy in small lots, but keep adding at every fall of 10%. Buy on a day the SENSEX starts to rise. Concentrate on long term profits and wait till clear direction emerges. Avoid being a "contrarian" !!! It is no fun standing in front of a running train!!!
6. It is not possible (nor necessary) to buy at the lowest point or sell at the highest point
REMEMBER - "If you can consistently make 30% every year you will be very rich even if you are now starting with a only a few thousands.”


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BEGINERS GUIDE TO BUILDING A GOOD PORTFOLIO (In Simple Stepsfor a total Novice)
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1. Open "Economic Times" news paper and find Stocks Page (Generally Page 10).
2. Find the following tables :-
(a) Names of Stocks in the Bombay Stock Exchange Sensitive Index (SENSEX or BSE 30 Index) and Names of Stocks in the National Stock Exchange Index (Nifty or NSE 50 Index).Present list is given below.
(b) Tabular Column showing the High and Low of both SENSEX & NIFTY in the past 3 Years.
3. Find AVERAGE LEVEL OF SENSEX OVER LAST 2 YEARS (as given below). YOU MUST START BUYING STOCKS ONlY WHEN THE SENSEX REACHES AROUND THESE LEVELS (Otherwise keep waiting- you can deploy funds in Fixed Deposits or other assets easily convertible into cash at short notice).

Example of finding AVERAGE LEVEL OF SENSEX OVER LAST 2 YEARS

YEAR-HIGH-LOW
2007-17,965-14,200
2006-13,860-10,200
OVER ALL 2 YEAR AVERAGE = 14056 (or about 14,000)

IMPORTANT
THIS IMPLIES THAT ONE SHOULD START BUYING SHARES WHEN SENSEX REACHES LEVELS AROUND 14,000

4. PRACTICAL STEPS & RULES FOR BUILDING A PORTFOLIO
(a) To begin with invest only that much money in the stock market which you can afford to lose completely.
(b) Buy only in 5 small lots never exceeding 30 % (of the total you intend to invest in the market.) at any one time.
(c) Start building the portfolio with small lots of top 15-20 Shares in the SENSEX which belong to different industries. These are the current leaders in their respective industries. The current list is given below:-

(i) ONGC, Reliance Industries, Indian Oil (Oil & Gas Industry)
(ii) Hindustan Lever (HLL), ITC, DABUR(Fast Moving Consumer Goods)
(iii) Tata Seel, Steel Authority of India (Steel)
(iv) Tata Motors, Mahindra & Mahindra (M & M) Bajaj Auto, Hero Honda(Automobile Industry)
(v) GlaxoSmithKline Beecham Pharma (Glaxo), Ranbaxy Laboratories, Dr Reddys Labs, Cipla (Pharmaceuticals)
(vi) Gas Authority of India (GAIL)(Natural Gas Industry)
(vii) Infosys, Wipro, Tata Consultancy (TCS) Satyam Computers (Software)
(viii) BHEL, Tata Power, Reliance Energy (Power Industry)
(ix) State Bank of India (SBI), ICICI, HDFC Bank (Banks)
(x) Larsan & Tubro (L & T)(Engineering)
(xi) Hindalco (Aluminium)
(xii) Indian Rayons, Arvind Mills (Textiles)
(xiii) Balrampur Chinni Mills (Sugar)
(xiv) Grasim, Gujarat Ambuja Cement, Ultratech Cement, ACC (Cement)

5. DIVERSIFICATION IS IMPORTANT. At any time you should have at least 10 shares belonging to different industries.

6. Never buy a share when it is falling. Wait for it to rise and buy it on that day. If it falls the day after wait till the day it starts to rise and buy another lot of the same size.

IMPORTANT:
AS A THUMB RULE - NEVER TRY AVERAGING (Buying at every fall) IN A SHARE WHICH IS NOT IN THE SENSEX OR NIFTY.

7. 80% of the money you invest must be in the top 50 companies mentioned above. 20 % may be invested in other A group. Avoid B1 or B2 stocks

8. When ever a particular share has given a profit of 30 % sell at least half of that share.

9. When ever all the shares you have (Meaning whole Portfolio) has given an overall profit of 30 %; start selling 10 % on each day the SENSEX falls. (Do not sell on days SENSEX rises)

10. When ever the SENSEX crosses the all time high sell 20% on each day the SENSEX falls.

EXAMPLE OF HOW THE STRATEGY WORKS OVER ALL :-

NOTE : Working is for a total investment of 1 Lakh spread over 10 Companies in equal amounts of Rs 10,000 each

1. Select 10 Companies from the list above.

2. Start buying only when SENSEX reaches around the 2 YEAR AVERAGE

3. BUYING THE FIRST LOT(or one fifth of the total amount to be invested) ---
----(a)Look for shares in the above list which have risen on the previous day.
Buy approximately equal amounts worth of each share (This means if you have Rs 1 Lakh to invest and intend to finally end up with a portfolio of shares of 10 companies, then buy each company share worth Rs 2000)

----(b) Watch the other shares that had not risen. Buy Rs 2000 worth each of them on which ever subsequent day whenever each of them rises.

4. Monitor each of the shares . If any of them falls more than 10% from the previous price then buy another lot worth Rs 2000 on the first day it begins to rise.

5. Stop buying each share when ever you have completed 5 lots.

6. Keep doing this procedure till you hav bought 5 lots of each of the 10 shares and thus reached a total investment of 1 Lakh )which you had intended to invest.

7. If at any stage the market or the shares starts rising and is running away do not panic and rush to Buy. The market is known to always give another chance. EVEN IF THIS DOES NOT HAPPEN BE HAPPY WITH THE PROFITS YOU MADE FROM THE SHARES YOU HAD ALREADY BOUGHT. YOU AT LEAST DID NOT LOSE !!!!!

8. A NOVICE SHOULD NEVER BREAK THESE RULES.

9 SELLING IS EASY IF YOU CAN LIMIT YOUR GREED AND CONTROL YOUR FEAR.--- THE OVER ALL AIM (for the whole Portfolio)IS TO BOOK PROFITS - HALF AT 20% to 30% and HALF of the SUBSEQUENT BALANCES ON EVERY RISE OF 10%. There are two ways this can be achieved :-

1. One way to achieve this "OVERALL AIM" (When we are dealing with individual shares in a Portfolio) - When the whole portfolio has given a gain of 20% to 30% start selling individual shares (one third of each)on every day you see each of them fall.

2. The second way to achieve this "OVERALL AIM"(When we are dealing with individual shares in a Portfolio) - When the whole portfolio has given a gain of "JUST 20%" start selling 10% worth of (any or all) shares on every day the SENSEX falls.(If the SENSEX rises above the "All time High sell 20% on every day the SENSEX falls after reaching a new all time high)

!!!! Easier said than done !!!

YOU WILL SOON REALIZE THAT THE MOST DIFFICULT THING TO DO, IS TO "LIMIT YOUR GREED AND CONTROL YOUR FEAR"

Don't regret if the market runs up further after you have sold all your shares. Remember what one of the greatest investors of all time said "SELL, REGRET, GROW RICH"

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COMPANIES TO WATCH
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RELIANCE (Group)
1. Watch all both Reliance Groups of Mukesh Ambani and Anil Ambani
2. Downward risk is not much.
3. These are is a long-term growth stories and deserve to be picked up.
4. However it is likely to give many trading opportunities but do not get tempted.
5. With the aggressive plans will steadily gain market share.
6. It is believed that other world players have great interest in these groups.
7. A number of favorable Government announcement are expected.


GLAXO
1. Proclaimed as India's Most Respected Company by BS Survey
2. Market leader with Multinational Parentage.
3. Scores very high on most parameters selected by our analysis team.
4. Likely to gain maximum from "Patents Regime" and any further dilution of Drug Policy.
5. Available at very reasonable levels.
6. Strongly supported by Foreign parent.
7. Will greatly gain from R&D


WIPRO

1. One of India's top software cum hardware company.
2. Fallen from very high levels.
3. Consistent growth over a number of years.
4. Investor friendly Management
5. Net profit growth of over 70% in last year. Profitability likely to increase.
6. Likely to lead Bull charge in software.


TCS

1. Undisputed market leader. in its own industry.
2. Consistent growth pattern over many years.
3. Not caught Investor Fancy yet. Hence available cheap.
4. Likely to show spectacular long term growth.
5. Secured very high scores on most parameters selected by our analysis team.
6. Very strong client base.


MONSANTO

1. Multinational company and leader in genetically modified seed technology.
2. This technology successfully used in many countries for high yield and saving of pesticides
3. Likely to be given clearance for some of its new products.
4. Share price likely to fall further.
5. Leader in Biotechnology sector in India, which will be a high growth, competence area.
6. Biotechnology shares appear to be leaders in the next boom.
7. Excellent research facility also supported by parent





HDFC

1. This is one of the most respected companies, and a clear market leader. Entry into insurance is likely to bring strategic advantages.
2. Still we have decided to recommend a sell because this was recommended by us at very low levels. It is good to book profits and later enter at lower levels.
3. Watch this share continuously as it has a 31% holding in HDFC Bank which will have a better growth story, given its e-commerce initiatives and dominant market position
4. HDFC has reached a high PE ratio and we feel a correction is over due.
5. Is a merger of the two companies likely ?????
6. Given the current situation it is better to sell HDFC and wait and watch.



BATA

1. This is one of our recommendations which gave returns well beyond our own expectations.
2.BATA has been a loss making company. Its turn around efforts have been spectacular.
3. Its large work force and a strong brand.
4. It has run up considerably and will perform well in future
5. It can become a sourcing point for its parent in Europe.
6. Its has made attempts improve its marketing effort.

Tata Power
1. This was recommended at very low levels by us.
2. It is not good to book profits at this stage..
3. Tata Power will be a great growth story in the future but we feel that it is wiser to book profits and re-enter after a likely correction.
4. A correction is likely because the Tata Group has not announced any specific steps for the company
5. Reliance Energy is likely to offer stiff competition.
6. However Tata Power may gain from any favourable announcement by the government for the piower sector as a whole.
7. You must not sell if you are a very long term investor.


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SWITCH TO THE FOLLOWING SHARES / INDUSTRIES
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Switch from weak stock to fundamentally strong companies in competitive industries given below.
1. Pharma industry : Dr Reddy, Glaxo, Novartis, Ranbaxy, Cipla, Pfizer.
2. Software industry : Infosys, Wipro, TCS, HCL Technologies
3. Biotechnology : Monsanto, Biocon, Aventis, Nath Seeds.
4. FMCG : Hindustan Lever, Nestle, Marico, Gillette, ITC.
5. Cement : ACC, Gujarat Ambuja, Grasim, Ultra Tech
6. Other Industries : Tata Steel, Ashok Leyland, Tata Motors, Raymond,.Welspun, Arvind Mills.


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RISK PROFILE
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1. The market had run up from much lower levels. Hence the fall can be deep.
2. Buying at present levels is not recommended.
3. However old & new economy stocks are reporting good results. Sectors like Cement, Steel, Engineering, Power, Technology still present good opportunity in the long run. However it is wise to wait and watch now.
4. For ICE (Information, Communication, Entertainment stocks), Cement, Steel, Engineering, Textiles, Pharma and Power the long term term prospects are very good. It will be safe to let the market bottom out and then re-enter
5. Considering the fact that the SENSEX in the past has fallen steeply after crossing all time highs,it can be said that it is likely retrace atleast 30%.
6. The Three main risks are "Rise in Oil Prices and Strengthening of the dollar, US intervention in IRAN or North Korea and Terrorist attacks like 9/11.
7. Pharma with the "PATENTS REGIME" and Textiles with the "PHASING OUT OF QUOTAS" are likely to be volatile though may be positive for both industries for both industries in the long term.
8.. The strong fundamentals- Political stability, Good Budget, Monsoons, low Inflation, ongoing reform and strong buying by FIIs in the long term augers well for the market in the long term. However in the short term there is considerable downward risk.

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***RELEVANT QUOTES
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"Fools rush in where Wise men fear to tread".
"Better to be safe than sorry". So do not buy now.
"Patience is divine"
The above sum up the present situation best.

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ALL TIME WORDS OF WISDOM
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A fool who knows exactly how foolish he is makes a lot of money on the stock markets but a wise man who does not know how wise he is loses all his money.

Sell, Regret, Grow rich. (The converse is not true- this means don't even hope to sell at the top or buy at the bottom)

As long as investment is not made on borrowed funds and stock picking is restricted to market leaders, one will get always get a chance to book handsome profits in the long run in a country like India which is growing at a high rate of 8% per annum This involves conditioning the mind to see the situation objectively and controlling the emotions of FEAR & GREED.

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***MACRO ECONOMICS
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Political stability appears to be achieved by the UPA.
Global risks have mounted and the market has moved in a manner that has left everyone speechless.

Is this still a bull market? Structurally and fundamentally, it is still one for the very long term.
But for the short & medium term is there going to be a deep correction ???
Bull runs normally rest on a 4 key things. Strong corporate earnings, robust economic growth, reasonable valuations and global investor confidence. It is debatable whether valuations are reasonable but the other three are in place. This means that the long term trend is up but in the short term there can be a correction. So it is wise to wait for the market to bottom out and in fact rise may be 4 to 5 persent and then enter.

High Crude oil prices are a big negative specially for India.
US interest rates is a very crucial factor, as without global inflows all emerging markets will struggle to move up. Interest rates will rise in India as well. The falling rupee will hurt imports.

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***INDUSTRY ANALYSIS
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1. FMCG, software, pharma, telecommunication, entertainment likely to gain.
2. Cement stocks have good long term prospects. Closely monitor run up significantly. ACC, GUJARAT AMBUJA GRASIM, Ultratech etc Start buying on signs of bottoming out.
3. ICE stocks may fall to very attractive levels & must be picked up then. They will lead the Bull Charge..
4. Biotechnology stocks need a very close look. Monsanto Chemicals likely to do well after getting clearance for its genetically modified cotton variety. These shares have started looking up after a fall of almost 45%.
5. Courier companies like BLUE DART are likely to gain a lot from E_Commerce initiatives.
6. PHARMA companies both Indian and MNCs specially Dr REDDYS, CHEMINOR DRUGS, CIPLA RANBAXY, NOVARTIS, GERMAN REMEDIES etc likely to do well after the new laws on "Product Patents"

PHARMA INDUSTRY
1. Valued at $ 4 Bn. Likely to do well in the new laws on "Product Patents"
2. Industry likely to see consolidation ( mergers & acquisitions ).
3.Most MNCs setting up 100% subsidiaries.
4. Danger of MNC launching new drugs through subsidiaries.
5. Big players working out co-marketing arrangements. eg. Ranbaxy & Glaxo.
6. Product patent regime from 2005 against present process patent.
7. Indian companies stepping up R & D. eg Dr Reddy, Cipla, Ranbaxy.
8. These likely to capitalise on drugs going out of patents in international markets because of cheap local production. (in 2003 approximately $ 7 bn)
9. Drug price control order is a menace. Likely to be diluted soon.
10. Slow down in domestic retail sales.
11. Unbranded products flooding the markets. ( Cipla, Cadila, Wockhardt)
12. Export to Russia & CIS countries resumed in 1999 end. (Hoechst Marion, Dr Reddy)
13. Future profit areas are cardio vascular, anti diabetes, anti viral & anti depressant. Volumes will come from vitamins

FMCG ( Fast Moving Consumer Goods)
1. Consists of personal care, cosmetics & home products.
2. Premium urban segment v/s popular segment. (price lower 70%)
3. Urban market saturated - most venturing into rural markets.
4. Advertising & marketing costs high. Low margin high volume business.
5. Boom in future as GDP likely to grow at 7%.
6. Preference shifting to branded products.
7. Dominated by MNC - HLL, P&G, Colgate etc.
8. Good monsoons crucial for growth in demand.
9. MNCs likely to gain with relaxation of import curbs & will distribute parents products in India.
10. Mergers & acquisition likely in future.
11. Companies restructuring & using IT to control inventory & distribution costs & supply chain management etc. Eg: HLL, ITC.
12. Product development, new launches & brand building crucial.
13. It is a defensive sector & investors invest to hedge risks in other industries.
14. This sector is completely dominated by HLL, ITC, Colgate, P&G etc.
15. These are solid companies & give good long term stable returns.

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***SHORT TERM TRENDS
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1. Market trend has not yet emerged but there is a slight bias to fall..
2. Overall the valuations are high and hence it is wise to continue to hold cash and wait for a clear trend to emerge.
3. Market likely to see fluctuations rapidly on a day to day basis. Watch for signs of a crash.
4. The influence of day traders (buying and selling on the same day) is clearly visible. This is likely to be a dangerous game
5. Software and Cement Industries should be watched very carefully.
6. The quarterly results of companies are likely to be good and individual shares may run up before the results..
7. The NASDAQ seems to be poised at cross roads & any rise will propel Indian software shares sharply upwards.
8. Old economy stocks to show steady rise. FMCG to regain its shine.


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LONG TERM TREND
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1. The very long term trend is up, but watch out for steep corrections.
2. The SENSEX and NIFTY are giving a false picture. It is wiser to look at all the shares as a whole basket.
3. Many of the time tested Blue Chips may fall. Wait for them to bottom out and start rising before buying.
4. Sell steadily with tight stop losses.
5. Book profits specially in all B1 and B2 group shares if you haven't done so already.It is dangerous to continue to hold them.

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***TIPS
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1. Listen to all tips and rumours but do not take action on any of them. Write them down date wise and look at them after a month. More often than not you will feel happy you did not act.
2. Keep close watch on Pharmaceutical, Biotechnology, Textile Construction Engineering and Cement companies.
3. Watch old favourites- Blue Chips like RELIANCE, HINDUSTAN LEVER, L&T, GRASIM,
4. INFOSYS, TCS, WIPRO, HCL TECHNOLOGIES and SATYAM COMPUTERS.


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***FII ACTIVITY (Activity of Foreign Financial Institutions)
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1. Foreign Financial Institutions (FII) sell in bouts
2. FIIs are bullish over the long term but they seem to have learned a few tricks from the Dalal Street Punters.


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***FI ACTIVITY (Activity of Indian Financial Institutions)
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1. No fixed pattern can be discerned from the activities of the Indian Financial institutions.
2. Despite having a predominant position as far as investments and muscle power are concerned they seem to prefer to play second fiddle. Otherwise there is no reason why FIIs and Punters move such a large market at will. This they do because they know they will get away with it.
3. Incompetence or vested interests may be considered as a reason.
4. They are likely to follow the Government in most matters



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***INVESTOR EDUCATION CAPSULE
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1. The aim of preparing this capsule is to train the small investor to take rational decisions based on information collected from every possible source with the clear understanding that EQUITY MARKETS ARE NOT TO BE SEEN AS GAMBLING DENS but a collection of KNOWLEDGEABLE, COOL HEADED, SKILLFUL PEOPLE WHO TAKE CALCULATED RISKS AND UNDERSTAND THE IMPORTANCE OF CONTROLLING AND MASTERING THE EMOTIONS OF FEAR, HOPE & GREED.
2. This capsule is being scientifically designed to cater to the needs of a "PURE NOVICE" and aims to gradually guide him along to achieve an experts understanding of not only INDIAN MARKETS but also GLOBAL and REGIONAL MARKETS as we believe that the Indian Markets have already achieved integration with Global Markets.


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***NRI / FOREIGN INVESTOR GUIDE

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1. THE NRIs have special needs and requirements. We are preparing a special training capsule to train them so that the hard earned money that they send home can be deployed profitably to cater to their old age and pension needs. More than this the money they send to India should be used to help India develop rapidly to eradicate poverty.
FOLLOWING HAVE ENHANCED ATTRACTIVENESS OF INDIAN STOCK MARKETS IN THE LAST DECADE:-
# RAPID GROWTH & LIBERISATION & REMOVAL OBSTRUCTION TO FII & FDI
# CHANGE IN GOVERNMENT POLICY ALLOWING 100% MNC subsidaries.
# REMOVAL OF TEXTILE QUOTAs AND NEW PATENT LAWS.
# OPENING UP OF VARIOUS SECTORS TO FOREIGN INVESTMENT.
# SOPs FOR VENTURE CAPITALISTS..


2. ONLINE TRADING, DEMATERIALIZATION OF SHARES AND CONCESSIONS/REMOVAL OF TAX ON GIFTS TO BLOOD RELATIONS HAVE MADE IT POSSIBLE FOR INVESTMENTS BY NRIs TO BE HASSLE FREE.

Contact Details
E mail jcjohn24111955@hotmail.com







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***PERFORMANCE OF PAST RECOMMENDATIONS
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The record of the performance of all the shares recommended by us is almost unbelievably good. We must admit that we have been very lucky but we strictly followed the rules we have recommended in "STRATEGY".
We must also admit that we were lucky we started when the markets had fallen to very low levels in 1998 and since then we have seen 4 major "Bull Runs"(High Levels of the SENSEX).

But more important than the good luck we had is the fact by following the rules and strategy we laid down for ourselves we managed to buy into the markets at low levels (not the lowest) and sold at high levels (Not the highest). This means WE MADE EXCELLENT PROFITS and NOT MAXIMUM PROFITS. This is one lesson which every "Small Investor" must learn as soon as possible.


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***IDEAS
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• Will the Prime Minister and Finance Minister be forced to go slow on reforms ??
• Will the UPA Govt become unstable with the struggle ???
• When will the next stock market scam break out???
• Will FIIs funds continue to flow into India.???
• When will hedge funds move out of India ?? Will this create havoc ???
• Will there be another major earthquake or tsunami or other natural calamity???
• How will US deal with North Korea & Iran??? War or Sanctions??
• What shape will Iraq take ??
• Will Indo - Pak dispute get worse or will it be resolved.???
• Will there be another 9/11 type of strike by Al Quida ???
• Will a terrorist group get hold and use a nuclear / biological / chemical weapon???
• Will J&K , Assam & North Eastern States situation get worse ??
• Will Crude Oil and fuel prices rise phenomenally ???
• Will the Dollar strengthen against the rupee or the other way round ???
• DON'T LET ALL THIS RATTLE YOU. YOU WILL MAKE MONEY IF YOU CAN KEEP A COOL HEAD !!!


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***EXPERT’S COMMENTS
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@ Sell-Regret but you will grow rich.( Book your profits too early) Opposite not true.
@ Select top 5 Blue chips-
@ When you meet Housewives on Dalal Street- SELL & Run for your life !!!
@ Read your News Papers (and Investment Magazines) 3 Months late- You will make more sense- and of course more Money ???


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***MUST READ
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1. The following reading material is recommended:-
a) Making Money On The Stock Markets by SS Grewal.
b) Stock Market Logic by Lovelock.
c) Quarterly results in Capital Market (magazine)
d) Investor guide in Economic Times (on Mondays)
e) Smart Investor in Business Standard (on Mondays)
f) Survey of Indian Industry ( annual publication by Hindu newspaper)




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***TAX TIPS
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1. With ZERO Long term capital gains tax Stock Markets have become a MUST for all as bank rate is low and is taxed.
2. Do not delay booking profits by letting the lure for getting advantage of ZERO Long term capital gains tax (by holding share for more than one year). Remember you would be saving tax only marginally as Short Term Capital Gains tax is only 10 % . It is not worth the risk.
3. Invest maximum amount in the account of the member of your family who is in the lowest tax bracket.
4. The capital gains made by a child is clubbed with the income of the parent.
5. Maximum use of savings (including mutual funds & investments under section 80C of Income Tax Act) should be made
6. It is a good idea to take a large housing loan & buy residential property to take advantage of tax benefits on the interest paid & the repayment of capital.
7. Reallocation of investable funds among family members must be done.
8. Booking of capital losses to get rid of weak stocks held in your portfolio is a good idea as it offsets capital gains.


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***MODEL PORTFOLIO
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PORTFOLIO

Lot1 Lot2 Lot3 Lot4 Lot5 Total

Name No / P No / P No / P No / P No / P No / P
ONGC
Reliance
Indian Oil
HLL
ITC
Nestle
Tata Seel
SAIL
Tata Motors
M & M
Bajaj Auto
Hero Honda
Glaxo
Ranbaxy
Dr Reddys
Cipla
GAIL
Infosys
Wipro
TCS
Satyam
BHEL
Tata Power
Reliance Energy
SBI
ICICI
HDFC Bank
L & T
Hindalco
Indian Rayons
Arvind Mills
Balrampur Chinni
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