All stocks recommended by EquityPandit Research Team at Equitypandit.com in its EP-Investor Package this Sunday are up by about 6-12% in two days. This is the Fourth Sunday since EquityPandit has relaunched its flagship product EP-Delivery Special Package in web mode and renamed it as EP-Investor Package. The web Portal for this package is www.equitypandit.in . Most of recommendations provided by EP-Investor Package zoomed. Some stocks like Concurrent India Infra and Unimin has given profits of 125% and 66% respectively within few days. Others have given profits of 20-40% within 2-3 weeks. No doubt, few scripts recommended are near cost price also.

Last year EP-Delivery Special Package (now known as EP-Investor Package) has given profits of 387% to its subscribers on their total amount and this year its is expected to cross 400% or even more !! EquityPandit  promises to provide better service and more such scripts every week by their well known Research Team.

Hope EP-Investor Subscribers are having good time.

EquityPandit one of the leading Equity research Company in India, gave huge profits after profits to its subscribers. EquityPandit has recently relaunched its one of the most popular investor package EP-Investor (Earlier called as EP-Delivery Special). Subscribers of EP-Delivery special package earned 387% on their total investment amount last year. EquityPandit now relaunched its package in web mode at www.equitypandit.in with much better recommendations and in the first month of its relaunching it gave few huge profits giving multibaggers to its subscribers.

EP-Investor recommended stock Concurrent (India) Infrastructure ltd (Recommended on 3 Jan, 2010) at the price of Rs.8 per share for the target of Rs.18 in 1 year. The stock was moving in lower circuits at that time but EquityPandit Research Team was sure about good fundamentals and better returns in the company. EquityPandit recommended its subscribers to buy that particular stock in much more quantity. This stock touched Rs.18 in last trading session but still EquityPandit research team suggests to hold this stock for the target of Rs.32 in coming days. WOW! 125% profits in 1 month and still ready for 300% profits.

Other stocks recommended this year by EquityPandit research rocked. Some other stocks recommended by EP-Investor Package were:

Unimin at Rs.3.14, CMP:5.40, Profits:66% in 20 days.

Sungold Capital at Rs.14, touched Rs.18 in 5 days.

WPIL at Rs.174 touched Rs.210 in 3 days.

Piramal Glass at Rs.68 touched Rs.78 in 3 days.

And many more……..

EquityPandit Research Team promises you all to provide you many such multibaggers in upcoming days. So Enjoy huge profits with midcaps and smallcaps multibaggers recommendations with EquityPandit EP-Investor package.

Indian Stock Market has made a low of 4670 for Nifty yesterday. Market is now trading around a level of 4600 on the lower side and 4970 on the higher side. So it would be very important for the market to break on the either side to reach a level of 5200 or 4500. However budget would be a key factor for the market. EquityPandit expects some bull rally in near term.

Now Its time to start investing some of your amount because if in any case budget comes out with surprise, which EP is expecting market may breach 5200-5300 levels for the Nifty and may see sharp new highs. This is the time, you should invest small-small amount on every dip in the market. Take this dip as opportunity which most of you have lost earlier during recession and after that. Don’t miss this train of bull rally. In worst case, Budget may not be investor friendly and market can see some sharp downtrend. But in any case market would not go below 4200 for Nifty. The best strategy is to invest your 10-10% at every dip before budget.

EquityPandit Research Team look recovery starting after April 2010 and would not stop. Invest in some fundamentally good companies which may see uptrend after budget 2010. Have you complete research. Go through complete fundamentals of the company, eps, pe ratio, earnings and also 3 years stock trend.

Note: EquityPandit’s EP-Investor Package is best tool available in Indian market which recommends you with fundamentally strong shares which may multiply your wealth in small time frame. EquityPandit recommends midcaps and smallcaps for very short term, midterm and longterm view, which have ability to multiply and are really cheap at current levels. The stocks recommended in this package see sharp uptrend within days of recommendations and provides profits ranging from 30-50% in small time frame. Stocks recommended in last three weeks since inception of this package (Earlier it was known as EP-Delivery Special) has given profits of 20-25% in 1-2 weeks. More details about EP-Investor Package can be retrieved at www.equitypandit.in Hope you don’t miss the train of bull run this time. Decision is yours !

For last couple of weeks, when Nifty was looking for highs of 5300, EquityPandit predicted the market direction down and declared the target of 4800 in coming days, and in worst scenario it can touch 4500. EquityPandit clients were already aware of this and were ask to exit at that levels and keep cash in hand so that they can invest in upcoming days.

Now also EP (EquityPandit) would stay with there research and would see market touching around 4500 soon in couple of weeks. Our subscribers are already having good cash in hand as they already booked profits at 5300 levels with EP guidance. Our reader also might have exited at the higher levels and would be having good cash in hand as we were constantly publishing it on EquityPandit.com and our EP-Investor ( www.equitypandit.in ) portal that market would see sharp downfall in coming week and the same happened.

Now what to do next?

Traders: Traders are advised to short. And they should exit longs as we are constantly suggesting this for last 2-3 weeks. Day Traders should remain cautious about market as some hiccups would surely be there but overall market would be in downtrend till march. EP sees Sensex touching 15000 levels or in worst scenario it may go down to 14000 levels.

Investors: Investors should look this downfall as opportunity to invest and should start investing some of there money below 4750 levels. Our target would be 4500. Our subscribers might be having whole cash in hand as we have already exited at 5300 levels. So congrats and now take dips as an opportunity to invest.

EquityPandit has relaunched its one of the most profits giving service- EP-INVESTOR (Earlier name was EP-Delivery Special). This is a premium service for investor and has a excellent track record in generating profits for subscribers. Profits for year 2009 for this package to its subscribers were 387% on total amount invested and if calculated script wise profits rose to 1148%.

The product has proved out to be one of the flagship product of EquityPandit as there was no losses in this product since its inception.

How this Service works?

In this package EquityPandit would suggest you smallcap and madcap multibaggers which would multiply your wealth in small time frame. Most successful investors and analysts believe more in investing than trading and had become millionaire by investing few thousand rupees in the fundamentally good companies at right time. EP-Investor package follows the investment techniques used by these analysts and the stocks they invest in. All recommendations are given after complete research of stock, book value, financial results, expansions, volumes, technicals as well as fundamentals of the company’s stock. EquityPandit would also provide you recommendations during some internal news which is disclosed in public after 15-20 days when stock price are already at top. 

What is medium of EP-Investor recommendations?

All recommendations would be posted on EP subscriber based web portal on Sundays. You would be provided unique username and password. If some opportunity comes during market days, then you would receive SMS for those recommendations as most of investors are not able to access internet during market days.

How much profits can be expected?

In EP-INVESTOR package, profits would be undefeatable and if investor posses patience, than his/her investment amount can be multiplied several times.

More details of this package can be retrieved at www.equitypandit.in

Current market is range bound. Nifty has been moving in the range of 100 points. 5183 is a strong resistance which nifty was unable to breach. Many times Nifty touched this level but was forcefully retreated. Currently market doesn’t seem to have the momentum to breach this level but bulls are trying hard to breach these levels for Nifty.

Advice for traders: Once these levels would be breached our next target may be 5300-5350-5500. To the lower side a strong resistance may be seen at 5051-4900 levels. If these levels would be breached than the next target would be 4700-4800. Stay away from the market till it breaches either level or trade with small volumes. Once any of these levels breaches a sharp movement may be seen. So wait for 20-30 minutes once any of these levels breaches and than trade forcefully if market sustains.

Advice for Investors: Currently market seems to be up till December end. Some choppy market may be seen next year in 2010. But current market seems to be good for investors. Plan for 2+ year of investments, wealth can be multiplied if invested in right madcap stocks. Invest only 50-60% of your amount at this point as some downside movements are expected and remaining amount should be used at that time to average the price levels.

Important Note: Now multiply your wealth from 6-10 times in 4-6 years with EquityPandit’s Investors portal which is going to be launched soon. Don’t forget the power of long term investments in selected small cap and midcap multibaggers which is fundamentally very strong to become large caps in few years. Invest where big investors and analysts invests. Registration would be started soon. Limited subscriptions! If you miss to register to this portal, you will miss some big thing! So grab the opportunity. 

Important Note: Now multiply your wealth from 6-10 times in 4-6 years with EquityPandit’s Investors portal which is going to be launched soon. Don’t forget the power of long term investments in selected small cap and midcap multibaggers which is fundamentally very strong to become large caps in few years. Invest where big investors and analysts invests. Registration would be started soon. Limited subscriptions! If you miss to register to this portal, you will miss some big thing! So grab the opportunity.

Last Trading Session: As we said we would like to stay away from the market as market seems to be tired at these levels so market just crashed like anything and no one has expected such a violated move for the market.

Today: Today Indian stock market would open negative as global market opened with big negative gap. Still I would recommend big buying around level of 4920 n hold for a while.

Note: Stocks to trade for F&O, intraday, short-term delivery, long term delivery and short selling and when to exit those stocks would be sent to paid subscribers live during the market hours through SMS.

BSE Sensex: (16855) The support for the Sensex is 16600 and the resistance to the up move is at 17000.

NSE Nifty: (5006) The support for the Nifty is at 4950-4920 and the resistance to the up move is at 5050.

F&O Cues: FII are net sellers of 948cr in Nifty future & net sellers of 60cr in stock future.

A common problem that many futures traders face that they start trading, make some decent profits, then all of the sudden they face an endless stream of losses. Eventually they end up losing their profits and eating away at their trading capital as they struggle to try and figure out what they are doing wrong. To be successful at trading futures, you must know what the common policies are and what you can do to profit in the different futures markets. Here are the most common mistakes of futures traders and what you need to do to be a good futures trader.

Common Futures Trading Mistakes

All successful futures traders have a system in place that will help them make better trades and keep their losses minimum. These strategies have been developed over time by the traders themselves or in combination with other trading systems. You can improve your way of success by avoiding the common mistakes that many make when their new strategy is starting to work for them. These include:

1. Not Sticking With Your System: Just when a trading strategy is starting to show results, many traders will turn or throw out the system that they are using. This change means that you will not be able to unemotionally evaluate the market, leading to incorrect analyses and ultimately, losses. Instead, when you start to see signs of a change in trend taking place, you should be prepared to get used to your strategy to the changing conditions. This gives you the flexibility to make consistent profits in any type of market.
   
2. Not Protecting Yourself: Futures trading (like all trading) does involve a certain degree of risk, so it is important to protect yourself. There are a few ways to do this, such as using a sell or buy stops to limit your losses to a comfortable level, or by using heading strategies like buying puts. This will keep your losses to a minimum while maximizing your profits.
   
3. Not Staying Focused: To trade successfully, your undivided attention is required to be able to read and evaluate the markets effectively. Sometimes distractions are unavoidable, but you always want to have as few distractions as possible when you are trading. This will help you to focus properly, thus increasing your odds of more profitable trades.
   
4. Not Being Open to New Ideas: The markets are always changing. No matter how great you think you are as a trader, there’s always a new idea that can help you improve your trading results. Too often, traders get caught up in thinking that they already know enough and they aren’t willing to learn anything new. As the market conditions change, this type of trader is left behind with nothing to show but losses. However, if you remain open to new ideas, you will be able to change with the markets - and profit consistently, no matter what they do.  

How To Be a Better Futures Trader 

A good futures trader is someone who can profit in any type of market condition. Traders come from many different backgrounds and lifestyles, but most good futures traders are:

1. Independent Thinkers
   Great futures traders think for themselves. They follow what is happening with world-related events, the markets and other factors to make their trading decisions. In times of collapsing prices, they avoid panic and seek out paths to profit by using bearish strategies. Conversely, they do not get caught up in greed when others are feeling like prices will continue to rise with no inevitable correction. Avoiding this kind of crowd mentality allows the best futures traders to position themselves and profit at the right time.
   
2. Strong Analysts
   To be a good futures trader, you must understand technical and fundamental analysis. The more you are able to apply your understanding, the better you will be at spotting trading opportunities. To do this you want to learn as much as you can about all the different forms of analysis. This will help you gain the knowledge and the experience necessary to make better trades. While this may seem like an enormous task, in reality it’s not. It can be done during your leisure time by reading different books, magazines, visiting futures-related websites, watching the news and by paper (practice) trading.
   
3. Active Learners
   To continue learning new ways of trading, consider going to seminars or other events where you can interact with other traders and learn to accept and use new ideas. This allows you to learn from other traders’ mistakes, meaning that your odds of having more successful trades increase. 
   
4. Handy with the Tools of Their Trade
   When you are trading futures information is key. You want to make sure that you have the ability to place trades 24 hours a day, have real time quotes, software to help you analyze the markets quickly and be able to receive fast executions. With these tools you will be able to react quickly to the changing market conditions.

The Bottom Line
Being a good futures trader means staying informed. Inform yourself about different forms of analysis, different strategies and learn from the mistakes of others. Trust in your well-researched strategy and your diligence will pay off. By following these simple tenets, you are increasing your odds of seeing more profits and fewer losses in these challenging yet rewarding markets.

The term Initial public offering (IPO) slipped into everyday speech during the IT bull market of the late 1990s & also in the period of Ketan Parakh when we had the best run in the IPO market. Back then, it seemed you couldn’t go a day without hearing about a dozen new companies who were cashing in on their latest IPO. And after that bubble investors found them self in a trap and also they lost their hard earn money during that time.

So, what is an IPO? How did everybody get so rich so fast? And, most importantly, is it possible for simple mortals like us to get in on an IPO? All these questions and more will be answered in this write up.

An initial public offering, or IPO, is the first sale of stock by a company to the public. A company can raise money by issuing either debt or equity. If the company has issued equity to the public, it’s known as an IPO.

Companies are mainly belonging to: private and public.

A privately held company has fewer shareholders and its owners don’t have to disclose much information about the company. Anybody can go out and incorporate a company: just put in some money, file the right legal documents and follow the reporting rules of your command. Most small businesses are privately held. But large companies can be private too. What is the need for IPO?

It usually isn’t possible to buy shares in a private company. You can approach the owners about investing, but they’re not forced to sell you anything. Public companies, on the other hand, have sold at least a portion of themselves to the public and trade on a stock exchange. Public companies have thousands of shareholders and are subject to strict rules and regulations. They must have a board of directors and they must report financial information every quarter. In India, public companies report to the Securities and Exchange Board of India (SEBI. From an investor’s point of view, the most exciting thing about a public company is that the stock is traded in the open market, like any other commodity. If you have the cash, you can invest.

• Because of the increased analysis, public companies can usually get better rates when they issue debt.
• As long as there is market demand, a public company can always issue more stock. Thus, mergers and acquisitions are easier to do because stock can be issued as part of the deal.
• When your stock traded in the open market you can offer your equity to your Employee to get best talent for your company.

Now if you want to apply for IPO here you have some points to watch out for.

No History

It’s hard enough to analyze the stock of an established company. An IPO company is even trickier to analyze since there won’t be a lot of historical information. Your main source of data is the red herring, so make sure you examine this document carefully. Look for the usual information, but also pay special attention to the management team and how they plan to use the funds generated from the IPO.

Successful IPOs are typically supported by bigger brokerages that have the ability to promote a new issue well. Be more wary of smaller investment banks because they may be willing to underwrite any company.

The Lock-Up Period

If you look at the charts following many IPOs, you’ll notice that after a few months the stock takes a steep downturn. This is often because of the lock-up period. Flipping 

When a company goes public, the underwriters make company officials and employees sign a lock-up agreement. Lock-up agreements are legally binding contracts between the underwriters and insiders of the company, prohibiting them from selling any shares of stock for a specified period of time. The period can range anywhere from three to 24 months.  but the lock-up specified by the underwriters can last much longer. The problem is, when lockups expire all the insiders are permitted to sell their stock. The result is a rush of people trying to sell their stock to realize their profit. This excess supply can put severe downward pressure on the stock price.

Flipping is reselling a hot IPO stock in the first few days to earn a quick profit. This isn’t easy to do, and you’ll be strongly discouraged by your brokerage. The reason behind this is that companies want long-term investors who hold their stock, not traders. There are no laws that prevent flipping, but your broker may blacklist you from future offerings - or just smile less when you shake hands.

Of course, institutional investors flip stocks all the time and make big money. The double standard exists and there is nothing we can do about it because they have the buying power. Because of flipping, it’s a good rule not to buy shares of an IPO if you don’t get in on the initial offering. Many IPOs that have big gains on the first day will come back to earth as the institutions take their profits.

Avoid the Hype

It’s important to understand that underwriters are salesmen. The whole underwriting process is intentionally hyped up to get as much attention as possible. Since IPOs only happen once for each company, they are often presented as “once in a lifetime” opportunities. Of course, some IPOs soar high and keep soaring. But many end up selling below their offering prices within the year. Don’t buy a stock only because it’s an IPO - do it because it’s a good investment. Best examples of hype are NHPC & Adani Power when people are simply rushed to apply for the IPO & just see the results.

Tracking the Stock

Tracking stocks means when a large company de merges one of its divisions into a separate entity. The rationale behind the creation of tracking stocks is that individual divisions of a company will be worth more separately than as part of the company as a whole.

From the company’s perspective, there are many advantages to issuing a tracking stock. The company gets to retain control over the subsidiary but all revenues and expenses of the division are separated from the parent company’s financial statements and attributed to the tracking stock. This is often done to separate a high-growth division with large losses from the financial statements of the parent company. Most importantly, if the tracking stock rockets up, the parent company can make acquisitions with the subsidiary’s stock instead of cash.

While a tracking stock may be spun off in an IPO, it’s not the same as the IPO of a private company going public. This is because tracking stocks usually have no voting rights, and often there is no separate board of directors looking after the rights of the tracking stock. It’s like you’re a second-class shareholder! This doesn’t mean that a tracking stock can’t be a good investment. Just keep in mind that a tracking stock isn’t a normal IPO.

Conclusion:

So before investing in the IPO one should be very clear whether he would go for short term or long term investment. Than he should know in which company he is going to invest. Normally companies with good fundamentals won’t give better returns at the time of listing but over the period of time they would give good return so watch out for these types of companies also.

The NSE Nifty mange to maintain its uptrend for the fifth consecutive session and closed above the 5,000 mark for the first time since May 22, 2008 i.e. at 16-month high. The mark 5000 was a big resistance for Nifty. The benchmark indices gained over 4% in five days.  

Buying in financial, technology, power, pharma, auto and oil marketing companies’ shares helped the markets to stay on the higher side throughout the session. Over 0.9% gain in European markets and 0.6% upside in US index futures were also supportive to the indices. 

Now market is at the stage where some downtrend may be seen. But any how good quarterly results are expected from Indian companies. 

EquityPandit.com would suggest staying invested and book profits in small-small quantities till market is in uptrend. Those who are yet not invested, stay away for some time.

If you ask several people what long-term investing meant to them, you might get different answers. Some may say 10 to 20 years, while others may consider five years to be a long-term investment. Individuals might have a shorter concept of long term, while institutions may recognize long term to mean a time far out in the future. This variation in interpretations can lead to variable investment styles.

For investors in the stock market, it is a general rule to assume that long-term assets should not be needed in the three- to five-year range. This provides a cushion of time to allow for markets to carry through their normal cycles.

However, what’s even more important than how you define long term is how you design the strategy you use to make long-term investments. This means deciding between Long Term and Extremely Long Term management.

Long-Term Strategies

Investors have different styles of investing, but they can basically be divided into two camps: Long Term management and Extremely Long Term management. Buy-and-hold strategies - in which the investor may use an Long Term strategy to select securities or funds and hold them for the period of Five to Eight year while Extremely Long Term strategy defines the period of Ten to Eleven years. Below table clearly shows that extremely long term strategy would be extremely profitable as compared to Long term strategy.   

                          * Bonus and stock splits are not calculated in this table

As shown in the above table Reliance Capital gave a negative return of 7% as in case of long term strategy while same script gave almost 987% in Extremely Long Term strategy and some where around 5000% return in 11 years.

                 * Bonus and stock splits are not calculated in this table

While Unitech gave a negative return of 4.5% in Long Term strategy as compared to 31340% in Eight year and a return of 988% in Extremely Long term strategy. In these returns we have not calculated bonus, dividends and stock split prices. Also when you invest in stock market for more than one year in particular scripts you would get Tax benefit.

Here EquityPandit.com shows some compelling data to convince investors to stay in for the extremely long run.

Active Management

One of the most important aspects of the investment is Active Management. It’s a bit difficult to understand the meaning of this term. But active management means you should actively manage your portfolio in such a manner that you should gain in a secure manner. That means there are so many risks involved when you have invested it for long term. Like just think the investor who had invested in Year 2007 his value is almost half or may be lower than that. But here the point is you should be very patient as you all know the recession we faced in year 2008 when most of us lost our hope & most investor sold their shares and booked huge loss. Mr. Warren Buffet the great investor guru predicted green shoot in the coming year & he starts buying & also holding the shares which he had. Just see the results of that he gained the biggest amount in Equity than any other Hedge fund in the world. So the conclusion is be patient, diversified your portfolio so you won’t suffer much in case of Satyam saga.

Timing

When it comes to market timing, there are many people for it and many people against it. The biggest proponents of market timing are the companies that claim to be able to successfully time the market. However, while there are firms that have proved to be successful at timing the market, they tend to move in and out of the spotlight. This is very much clear from above tables. What this data suggests that timing the market successfully is very difficult because returns are often concentrated in very short time frames. Also, if you haven’t invested in the market on its top days, it can ruin your returns because a large portion of gains for the entire year might occur in one day. Means say we have two investors. One who invested in Unitech in year 1998 he may have fed up in 2003 when there was no movement in the script. Possibly he may booked loss or still he believe in his decision and stayed invested he gained almost 31000% in next three year but that’s a extremely difficult to take a call whether he remain invested or not. But we have second investor who continuously study the market condition, who keep the script record including it’s financial performance & when he got clues of bull condition he bought the script In year 2003. He got the same return in small time span what first investor got within a big time span. So you should be in continues touch with the market, Economy & in the script in which you have invested.    

Conclusion

If volatility and investors’ emotions were removed completely from the investment process, it is clear that passive, long-term (8 years or more) investing without any attempts to time the market would be the superior choice. In reality, however, just like with a garden, a portfolio can be refined without compromising its passive nature. Historically, there have been some obvious dramatic turns in the markets that have provided opportunities for investors to cash in or buy in. Taking cues from large updrafts and downdrafts, one could have significantly increased overall returns, and as with all opportunities in the past.

Yesterday: Market opened flat but slipped quickly due to profit booking at these levels.But still manage to close above 4450.

Today: Indian Stock Market is expected to to open positive mainly because of positive global cues but it would be interesting to see whether nifty would cross the level of 4510 n than next target would be 4600 in a day or two.

Note: Stocks to trade for intraday, short-term delivery, long term delivery, short selling and Futures and when to exit those stocks would be sent to paid subscribers live during the market hours through SMS.

BSE Sensex: (15062) The support for the Sensex is 15000 and the resistance to the up move is at 15500.

NSE Nifty: (4469) The support for the Nifty is at 4450 and the resistance to the up move is at 4605.

F&O Cues: FII were net buyers of 321 crore in Index Future and sellers of 391 crore in stock futures.

Results to be declared today: BHEL, Canara Bank, Hind Zinc, IFCI, Mastek, Teck Mah, Wipro, NDTV, Wire n Wireless

Fundamentals of Stock Market: Tutorial-6

Technical Analysis: What Is A Chart?

In this section we would provide information regarding charts i.e. basic definition of charts and its properties.

In technical analysis, charts are similar to the charts that you see in any business setting. A chart is simply a graphical representation of a series of prices over a set time frame. For example, a chart may show a stock’s price movement over a one-year period, where each point on the graph represents the closing price for each day the stock is traded:

Above Figure provides an example of a basic chart. It is a representation of the price movements of a stock over a 1.5 year period. The bottom of the graph, running horizontally (x-axis), is the date or time scale. On the right hand side, the prices of some script are running vertically (y-axis). By looking at the graph we see that in Point 1, the price of this stock was around 245, whereas in June 2005 (Point 2), the stock’s price is around 265. This tells us that the stock has risen between October 2004 and June 2005.

Chart Properties:

There are several things that you should be aware of when looking at a chart, as these factors can affect the information that is provided. They include the time scale, the price scale and the price point properties used.

The Time Scale

The time scale refers to the range of dates at the bottom of the chart, which can vary from decades to seconds. The most frequently used time scales are intraday, daily, weekly, monthly, quarterly and annually. The shorter the time frame, the more detailed the chart. Each data point can represent the closing price of the period or show the open, the high, the low and the close depending on the chart used.

Intraday charts plot price movement within the period of one day. This means that the time scale could be as short as five minutes or could cover the whole trading day from the opening bell to the closing bell.

Daily charts are comprised of a series of price movements in which each price point on the chart is a full day’s trading condensed into one point. Again, each point on the graph can be simply the closing price or can entail the open, high, low and close for the stock over the day. These data points are spread out over weekly, monthly and even yearly time scales to monitor both short-term and intermediate trends in price movement.

Weekly, monthly, quarterly and yearly charts are used to analyze longer term trends in the movement of a stock’s price. Each data point in these graphs will be a condensed version of what happened over the specified period. So for a weekly chart, each data point will be a representation of the price movement of the week. For example, if you are looking at a chart of weekly data spread over a five-year period and each data point is the closing price for the week, the price that is plotted will be the closing price on the last trading day of the week, which is usually a Friday.

The Price Scale and Price Point Properties:

The price scale is on the right-hand side of the chart. It shows a stock’s current price and compares it to past data points. This may seem like a simple concept in that the price scale goes from lower prices to higher prices as you move along the scale from the bottom to the top. The problem, however, is in the structure of the scale itself. A scale can either be constructed in a linear (arithmetic) or logarithmic way, and both of these options are available on most charting services.

If a price scale is constructed using a linear scale, the space between each price point (10, 20, 30, 40) is separated by an equal amount. A price move from 10 to 20 on a linear scale is the same distance on the chart as a move from 40 to 50. In other words, the price scale measures moves in absolute terms and does not show the effects of percent change.

If a price scale is in logarithmic terms, then the distance between points will be equal in terms of percent change. A price change from 10 to 20 is a 100% increase in the price while a move from 40 to 50 is only a 25% change, even though they are represented by the same distance on a linear scale. On a logarithmic scale, the distance of the 100% price change from 10 to 20 will not be the same as the 25% change from 40 to 50. In this case, the move from 10 to 20 is represented by a larger space one the chart, while the move from 40 to 50, is represented by a smaller space because, percentage-wise, it indicates a smaller move. In Figure 2, the logarithmic price scale on the right leaves the same amount of space between 10 and 20 as it does between 20 and 40 because these both represent 100% increases.

In the next section we would describe different types of the Charts and what would be the best methods to read the charts.

Fundamentals of Stock Market: Tutorial-5

Difference between technical & Fundamental analysis

Technical analysis and fundamental analysis are the two main attentions in the financial markets. Mainly, technical analysis looks at the price movement of a security and uses this data to predict its future price movements. Fundamental analysis, on the other hand, looks at economic factors, known as fundamentals. Let’s see how it works to determine the correct value of stock and how technical and fundamental analysis can be used together to analyze securities. 

Charts vs. Financial Statements

At the most basic level, a technical analyst approaches a security from the charts, while a fundamental analyst starts with the financial statements. By looking at the balance sheet, cash flow statement and income statement, a fundamental analyst tries to determine a company’s value. In financial terms, an analyst attempts to measure a company’s fundamental value. In this approach, investment decisions are fairly easy to make - if the price of a stock trades below its intrinsic value, it’s a good investment.

Technical traders, on the other hand, believe there is no reason to analyze a company’s fundamentals because these are all accounted for in the stock’s price. Technicians believe that all the information they need about a stock can be found in its charts.

Time approach for both the technique

Fundamental analysis takes a relatively long-term approach to analyzing the market compared to technical analysis. While technical analysis can be used on a timeframe of weeks, days or even minutes, fundamental analysis often looks at data over a number of years.

The different timeframes that these two approaches use is a result of the nature of the investing style to which they each adhere. It can take a long time for a company’s value to be reflected in the market, so when a fundamental analyst estimates intrinsic value, a gain is not realized until the stock’s market price rises to its “correct” value. This type of investing is called value investing and assumes that the short-term market is wrong, but that the price of a particular stock will correct itself over the long run. This “long run” can represent a timeframe of as long as several years, in some cases.

Furthermore, the numbers that a fundamentalist analyzes are only released over long periods of time. Financial statements are filed quarterly and changes in earnings per share don’t emerge on a daily basis like price and volume information. Also remember that fundamentals are the actual characteristics of a business. New management can’t implement sweeping changes overnight and it takes time to create new products, marketing campaigns, supply chains, etc. Part of the reason that fundamental analysts use a long-term timeframe, therefore, is because the data they use to analyze a stock is generated much more slowly than the price and volume data used by technical analysts.

Trading Versus Investing

Not only is technical analysis more short term in nature that fundamental analysis, but the goals of a purchase (or sale) of a stock are usually different for each approach. In general, technical analysis is used for a trade, whereas fundamental analysis is used to make an investment. Investors buy assets they believe can increase in value, while traders buy assets they believe they can sell to somebody else at a greater price. The line between a trade and an investment can be blurry, but it does characterize a difference between the two schools. Some analyst see technical analysis as a form of black magic. Don’t be surprised to see them question the validity of the discipline to the point where they mock its supporters. In fact, technical analysis has only recently begun to enjoy some mainstream credibility. While most analysts on Wall Street focus on the fundamental side, just about any major brokerage now employs technical analysts as well.

Much of the criticism of technical analysis has its roots in academic theory - specifically the efficient market hypothesis (EMH). This theory says that the market’s price is always the correct one - any past trading information is already reflected in the price of the stock and, therefore, any analysis to find undervalued securities is useless. 

There are three versions of EMH. In the first, called weak form efficiency, all past price information is already included in the current price. According to weak form efficiency, technical analysis can’t predict future movements because all past information has already been accounted for and, therefore, analyzing the stock’s past price movements will provide no insight into its future movements. In the second, semi-strong form efficiency, fundamental analysis is also claimed to be of little use in finding investment opportunities. The third is strong form efficiency, which states that all information in the market is accounted for in a stock’s price and neither technical nor fundamental analysis can provide investors with an edge. The vast majority of academics believe in at least the weak version of EMH, therefore, from their point of view, if technical analysis works, market efficiency will be called into question. (For more insight, read What Is Market Efficiency? and Working Through The Efficient Market Hypothesis.)

There is no right answer as to who is correct. There are arguments to be made on both sides and, therefore, it’s up to you to do the homework and determine your own philosophy.

Combo Pack?

Although technical analysis and fundamental analysis are seen by many as polar opposites - the oil and water of investing - many market participants have experienced great success by combining the two. For example, some fundamental analysts use technical analysis techniques to figure out the best time to enter into an undervalued security. Oftentimes, this situation occurs when the security is severely oversold. By timing entry into a security, the gains on the investment can be greatly improved.
Alternatively, some technical traders might look at fundamentals to add strength to a technical signal. For example, if a sell signal is given through technical patterns and indicators, a technical trader might look to reaffirm his or her decision by looking at some key fundamental data. Oftentimes, having both the fundamentals and technicals on your side can provide the best-case scenario for a trade.

While mixing some of the components of technical and fundamental analysis is not well received by the most devoted groups in each school, there are certainly benefits to at least understanding both schools of thought.

Railway minister Mamata Banerjee today announced rail budget which almost meets public expectation which include cheap tickets for the poor and no increase in freight or passenger fares, as well as steps to boost the sprawling system’s efficiency and finances. 

Friday’s railway budget speech underscored the Congress-led government’s focus on “comprehensive growth” after it was reelected by a wider-than-expected margin in May. Prime Minister Manmohan Singh’s government will present its budget on Monday. “The old mindset of economic viability should be substituted by social viability,” Railways Minister Mamata Banerjee said in an address to parliament.

Over the five years through March 2009, Railways generated a cash surplus of about $18.8 billion.  

Railway Budget 2009-10: Key Highlights:

• No change in passenger fare and freight tariff
• Plan outlay of Rs 40,745 cr. Proposed for 2009-10
• Special trains for perishable farm produce, facilities for transportation of rural craft
• Works for 7 new lines,  gauge conversion of 17 lines and doubling of 13 lines to be taken up
• Faster parcel services proposed on three routs
• Tatkal fares reduced by Rs 50 to Rs 100
• Railway tickets to be made available through post offices and ‘mushkil aasaan’  mobile vans
• Concession for press persons increased to 50%
• Monthly ticket of Rs 25 for unorganized sector/poor under ‘izzat’ scheme
• “Only ladies’ emu trains at delhi, kolkata and Chennai
• ‘Yuva trains’ from rural hinterland to metros at concessional fare
• 12 new point-to-point ‘turanto’ trains
• 57 new trains, extension of 27 trains and increase in frequency of 13 trains and air-conditioned double-decker trains proposed
• 50 stations to be upgraded to world class stations
• Long distance trains to have on-board doctors and infotainment services
• Handicapped and aged persons to have more amenities
• Special trains to ferry perishable agro products and rural handicrafts
• Special fund for the development of north east railway
• Quazigund-anantnag line to be completed by next month
• Plans to acquire 18,000 wagons in FY10
• Railways to come out with while paper on financial status and vision-2020 document

Effect of Budget on Railway Stocks: