Sunday, November 6, 2011

My bad calls.........

I would like to throw some light on  my bad calls today.
I have given many bad calls like Allied Digital, Rathi Steel,Ennore Coke, Nutek India, etc etc
Let me discussed it.
Remember first thing.Always try to find things on your own.Don't follow someone blindly.Mistakes are bound to happen.We are all human being.
Second, in stock market be always on toes.
Always look out for Promoters selling,Eq expansion,sales, NP and diversification of Co.
These are ares where one needs to be very very agile.
1)Promoters selling is a very very big negative for any stock.So every quater go to bse site and look whether promoters stake has decreased or not.Any selling over 1-2% in promoters holding says something is wrong .......try to find out why that is happening.

2)Eq expanasion is a second very big thing one needs to lookout for.Whatever stocks you hold, click on all annoucement on bse everyday to see if there is any annoucement from the stock you are holding and if you find one click on that and read what is written there.If Co is dilutiing eq then become agile.If the sales is not good and if eq dilution is taking place then you need to sell such stocks India.

3)Always look for sales qr to qr and year to year.If sales remains stagnant and profit remains stagnant it is OK but sales going down and hence NP also going down then ALARM BELL   needs to ring in your EARS.As soon as sales is down we need to understand that something is wrong here.Start selling that stock unless you see some reason why that happened and you are confident that sales will be back to normal.

4)If bottomline is going down then again that is a khatare ki ghanti.Why the NP went down?That is the first question one needs to ask yourself.If raw materail price has gone up then it means that Co is not able to passon the cost to consumers.That is a bad productline.

5)Alawys be on alert for any diversification in business of any Co.See what they are trying to do.If you feel that Co will not be able to maintain the new business it is time to sell the stock.

See friends,stock market is not for those who wants to buy and sit on it.Ofcourse one can do that but then one needs to buy stocks which are already bluechip like Siemens, L&T, BHEL, ABB, Areva, Thermax, Bharat Forge etc etc where the business has already been established.These Cos already have big name and hence they have no problem in selling their produict.
But for Midcaps and Smallcaps one needs to be on constant vigil.
It is not possible for me to keep writing things for each and every calls I made here that this Co is not doing good or the sector has gone out of favour etc.
So please keep track on what you possess and take decision immidiately.Don't wait for anyone.
The best thing to me to do is, sell stock which you bought goes down by 15-20% immidiately even if it is in a LOSS.Because once stock goes down by 15-20% then there needs to be real bad news coming up otherwise market(read operators) are very smart not to sell such stocks.
Once stock goes down by 15-20% then that is a downtrend and it becomes very hard to come back.So sell as soon as stock goes down by 15-20% and if feel that stock is good ,buy lateron.
The downtrend can be of various type.The momentum is broken and the momentum gets broken for a perticular stock even when there is bull market.The overall sentiment is not good of the market and hence stocks are going down.
Most probably, when a stock goes down by 15-20% then it is time to sell even if it is a LOSS.It may happen that some stocks may deceive you and come back again but they are RARE.Most probably if you sell stock on 15-20% down from your buying price you are going to be right.
Again I reiterate, this is my view and I maybe wrong.Take your own call.


  1. Dear Rajeev,

    Rathi steel management has raised their stake by adding 1 lakh shares , though a small qty.The fundamentals has not changed since its more or less making same amount of profits but with increased outgo on interest rate.

    Same way Ennore coke has not given better result but is it not a Shriram group company which will succeed finally ? Share holding pattern of the management has kept increasing last 2 qtrs.
    Then why are you telling these are bad calls.

    Any justification or change in your outlook. Or just the price slaughtering has pushed you to brand it as bad call?


  2. Murali,
    No, Ennore Coke comes from Shriram gr and that is ofcourse a very reputed gr.Likewise in Rathi Steel also the small stake raise from promoters makes it a good candidate.
    What I meant my bad call is the price it was recomended and price it is now.Moreover some stocks has failed to deliver as well like Allied Digital, Ennore Coke on bottomline front.
    But all my readers needs to write down the 5 points that I have written down here and try to follow the rule of selling any stock if it goes down by 15-20%.

  3. hello rajiv ji,
    i was just reading venus remedies annual report , and i was surprised to find that the promoter has pledged 19.6 lkh shares. whereas total no of equity shares are 91 lkh, so promoter holding is 30 percent which means that out of total promoted shareholding of 27 lkh promoter pledged 20 lkh whats ur take on that. do u thk that being a businessman you will care for a company in which u have just 7 lkh shares out of 91 lkh.
    sir plz threw some light so that i can learn from ur experience.

  4. Hi Manoj,
    That is the reason why market is not discounting Venus at par with other Pharma Co.
    50 eps and stock trading at 200! means a Pharma Co with a huge bottomline is quoting at what 4 P/E?
    Venus management has problems in recent past not able to pay the FCCB and they were on verge of default but that was averted as they somehow managed it.
    I would still bet on Venus as I feel market will take note of it sooner or later and will get adequete discounting.....

  5. no problem, sharing your thoughts pls guide us happens

  6. Hi Rajeev,

    Just for learning purpose, I took up the case of SREI. I am still an amateur but just trying to see if I can put the points that you gave on top to practicality.

    SHP: 46.22 - not changed since the last 3 qtr (OK)
    FII: MAR 13.37, JUN 14.17, SEP 14.3 (GOOD)
    Revenue: MAR 161.58, JUN 225.42, SEP 264.65 (GOOD)
    NP: DEC 50.81, MAR 23.15, JUN 33.29, SEP 7.96 (SUSPECT)

    Profit curve is like my engineering semester results ;) Fluctuating. Now, is this a bad sign?

    Also, their latest announcements have been mostly listing of new equities! Doesn't this mean more dilution? and which could be bad?

    The last time I heard you talking of SREI, it was still positive, so probably I am wrong somewhere or may be taking the points of you post little too literally.

    Currently I am holding SREI at close to 30% loss which was due to their bonus shares.

    Kindly correct my understanding.


  7. Dear Rajeev,

    Browsed though your post "My bad calls" would like to appreciate your faithfulness. Equity Market Research is a very big subject, one should focus on Technical and Fundamental analysis to become an experts.

    Your blog is excellent resource for learners, keep posting, Dalal Street Investment Journal Wishing you all the best for your future en-devours.

  8. Sumit,
    All the parametres you wrote are correct but the eq dilution is due to adding of Quippo and Quippo merger is positive for the Co.
    The NP is down because of the higher rate increased by the RBI.
    The Quippo value is still to be unfold and will take time to show in the bottomline.
    They have also a stake in Bhashar Solar and also taken over DPSC from DII's.
    Read my full detail report on SREI Infra which I gave here.
    It is not all eq, sales, np..etc should be also able to find out the value that can unfold in future......

  9. Dear Editor( Dalal Street Investment Journal),
    I thanks for your kind words.
    I am trying to help and serve small investors in whatever way I can with all my experiance in stock market through this blog.
    Thanks once again for the wishes.......

  10. Dear Rajeev

    What you think about Agre developers....Is it a long term pick?

    Vishnu R Nair

  11. Vishnu,
    I am not sure about the business line.I donno anything about it....