28 June 2009

Markets are still weak.

Indian Bank looks good:
monthly data: high 154, low 123
last week data: high 143, low 127.
Daily data: high 143, low 123 ( so weekly high was achieved on the last day of the week)

Notes:

Macro: banking is still good.


Fundamental - low pe (4.86), 52 week high 153. roe 22.53%, last div 30%, book value per share 153. free cash per share 81. bad current ratio but good quick ratio. sales, net profit and net profit margin all went up in Q109.


Technical: Daily RSI just turned positive, MACD about to cross zero., stochastic went into overbought zone. short terms average just went above long term average.

weekly, monthly momentum, RSI signals bullish. weekly short term average above long term average

Risks: trading almost at KLT upper limit. monthly short term average still below long term.

(Confusing point - whats better: move in when stoch goes above average or should one wait till macd fires)

will see, as of 26 june friday, indian bank closed at 141.

Portfolio

Porfolio Characterstics:
Holding period - 3 months
Target Return - 12%
Stop Loss Exit - 20%
Capital in one trade - max 5% of portofolio
Hedge - none, only through margin play

Allocation (Soros):
60% - cash stocks
20% - marging plays/f&o
20% - cash

MS Recommendatoin - Cyclicals/industrials
Lookout - Special situations (saytam, unitech, adlabs) with capital allocation of 0.5% of portfolio

Week 21 June 2009

Am bearish going into the week based on some of the tech indicators and F&O data I looked at. there will be a small pull back that will try to take the index to 4400-4450, if it hold at that level then it should go further up, else it will come down and go below the current level which is 4313. lets see.

FOMC auction as all are saying will be a key event, i dont see why so much fuss about it. there is a ton of data to be out this week in Aisa - consumer index, personal spending data etc from Japan.

Wondwring whats the way to play the lag in monsoon.

And, finally, I want to short steel companies. But I cant.

test

test post

DCB

Macro
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In the private banking sector, banks have grown -6.5% to 68% yoy - DCB is -26% yoy
Baking will get hit after budget as banks will be forced to reduce interest rates. This will put DCB’s margins further under pressure.
Further, since DCB is in developed states, people are now taking money out of saving accounts and putting it in stock markets again.
At the same time, more people will be provided credit with improving economy, so some improvement in fee/interest income, but here DCB will have to win compete with other banks.

Fundamental/Competition
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DCB has a PE of 2.4, book value per share is 36. EPS of 18
Profit margin of 5% and ROE 6% which are not very good.
Fitch recently downgraded DCB to BBB (Feb).
The bank’s net profit in Q390 dipped to -3.5 cr vs 25.5 cr in Q308.

Any new JV, marketing/business development strategy?
How are they handling NPAs – reducing unsecured personal loans gradually.
With lower margins, DCB needs to grow the business and scale up. Currently 80 branches. Good point is its getting started in the secured lending business at a time when most banks are hesitant to take further exposure.

F&O
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Increase in open interest by 0.3%
Near month Futures trading at 42.30 (1.3% premium).

Technical
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5 day sma - 43.5
50 day sma – 29.8
200 day sma – 28.8

Chart
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3 month chart - showing 2nd phase of Elliott wave, price just crossed 10 day sma
MACD became negative (so am going reverse momentum)