Official Website: www.gateway-distriparks.com
Business: Gateway Distriparks Ltd is a Container logistics company with Pan-India presence.

Why Gateway Distriparks is Multibagger?

The company has been reporting strong numbers for last few quarters and in the current quarter the company has shown an increase of about 35% in sales and 20% in profit YoY. Better capacity utilization and higher volumes has helped Gateway Distriparks Ltd to post such good result.

Plotting quarterly important results data of GDL from Moneycontrol  we have the following graph

Stock Technical’s

6 months charts of GDL suggest, stock has reacted positively on the back of good results. The stock is near its 52 week high of around 150. My view is the stock will consolidate around the current levels of 140-150 INR for some time before forming a breakout pattern.

Ratios

Presently, Gateway Distriparks is trading in range of 140 to 150 i.e. at a PE of about 17. With 35% sales growth and 20% profit growth, PE expansion is pretty much likely.

Interest cost for GDL is reducing all the time and the company has announced Dividend 3 times in a year’s time suggesting good cash levels for the company.

My Position

Due to very volatile markets and Nifty hitting support of 5200 twice in last 2-3 trading sessions I have a very small long position on this stock at an average purchase price of Rs 144. Yes I do plan to add more as I see more positive clues in the market and stock performs as I expect. My stop loss for the stock is if it breaks 140 decisively. I have scheduled the post to go live after the market close on Friday so you can do you homework on the stock in the weekend and don’t forget my disclaimer.

Share all your questions as well as views on Gateway Distriparks Ltd in comments below.

Update 14th Nov 2011: The stock is trading below 140 and make sure you make the right trading decision. I am out of the stock currently.

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Nestle India

Neslte Being a Giant player has not cracked much below 4200 support levels but has consolidated around the levels of 4200 since then. Nestle India can be a good buy around the same level of 4200 now with a formation of anticipated breakout pattern.

Camlin

Camlin crashed to 50 odd. Most of the fall can be for the closure of open offer but still the support being broken has proved crucial for Camlin fine chemicals.

What are your views on stock that cracks major support levels?

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Criteria for selecting Forever Stocks

If you are following my blog for last few months you may be aware that I am not been very bullish. If you missed you can read my post Signals of Market Crash later.

To create the list of forever stocks I used a very simple logic of sector eradication which I am going to share here.

Let us divide the world markets into 2 parts. First those countries that have issues with maintaining growth and the second one are those that have growth going forward but have concerns related to inflation. India falls into the second category and so issues here in India is related to inflation.

RBI is trying to bring down inflation by controlling liquidity. The problem is never the liquidity but RBI has very little option when it comes to controlling inflation and all it can do is control liquidity and this in turn is actually not helping control the inflation but is also hurting the growth because of high interest scenarios going forward.

So India has problems with high interest rates. Interest sensitive sectors like Banks and Real Estate companies go out of my forever stocks. [Reason SBI could not make to my list of forever stock.]

We have just seen the recession in 2008 and in couple of years time everyone was and is talking about the new growth platforms. What this actually did was (and is) – Everybody is now wanting to catch on the future growth and don’t want to miss out. This made the equity markets and commodity prices soar very quickly in last couple of years and we again fear yet another recession. I am not the right person to predict we will go into recession or not but the scenario is making everyone uncomfortable.

If another recession is considered you should keep yourself away from sectors like heavy industries and Infrastructure. [Reason BHEL, L&T could not make it to my list].

So I considered stocks that have mix of Good Indian demand story in sectors excluded by above scenarios.

Why for each of my Forever stocks

1. Nestle India – Food giant which has shown very good results for last 18 quarters. That speaks for itself.
2. Asian Paints / HiTech Plast – India growth story but yes OIL prices can have an impact on the stock.
3. Infosys – Can benefit heavily because of Forex movement.
4. Coal India – Demand of Coal always on the rise but dampening coal prices can have an impact on the performance of the stock.
5. VIP Industries – Indian demand story.
6. Lovable Lingerie – Unique player with good Indian demand story.
7. Hero Motocorp – Company has come out with flying colors in Honda deal.
8. CRISIL – Always buy and forget stock.
9. Havells India – Indian demand story.
10. Titan Industries – Indian demand story.

I wish I could add more Forever Stocks?

The list is for my investing and so it is never complete. I wish I could add few more companies from Pharma sectors as well but they could not make my list of top 10 stocks. May be I could have added them in top 15. You never know.

I hope this clarifies all the doubt. Share your views in comments below.

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As a general disclaimer I have investment in majority of them and even have the plans to invest more in the list.

1. Nestle India
2. Asian Paints / HiTech Plast
3. Infosys
4. Coal India
5. VIP Industries
6. Lovable Lingerie
7. Hero Motocorp
8. CRISIL
9. Havells India
10. Titan Industries

What is your list of 10 eternal stocks that you can buy now and forget forever? Share the list in comments.

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Technicals

Technically we see charts of Punj Lloyd for last 2 years and see how this stock has performed.

There is no point in having any technical analysis applied to this charts when you see an such long down trend.

Fundamentals

Many readers try judging a stock with good fundamentals of the company but as per IndiaEarnings Punj Lloyd has an EPS of 0.37 and PE of 174.46 but is trading at half its book value of 107.94.

For me fundamentals of the company has more to do with the company management than with mathematical numbers. As far as I remember Punj Lloyd IPO was somewhere in 2006 (don’t quote me on this because this is not based on facts but based on my memory) and price range was around 500 if I remember correctly. It had one stock split of 5:1 and so if you had invested in Punj Lloyd at the time of IPO cost of your holding would have been roughly 100 Rs per share. They have given roughly dividend of 30 Paise each year which is pretty negligible.

So your 100 Rs invested in this company 5 years back would fetch you 65 Rs as of today. I am sure this tells the fundamentals of the company. Punj Lloyd is not able to turn their fortune in 5 years time frame.

Final Thoughts

Punj Lloyd is one of those worst stocks that are in Nifty and is even recommend on News channel many a times by analysts especially on Zee Business. Short covering and trading bounce in this kind of stock can always be seen but make sure you are not trapped into such stock for value investing.

Charts by Interactive Brokers Trader Workstation

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Check out Press Release as well as Research PDFs I have attached to this blog post for your reference.

CRISIL Research has initiated coverage on Hitech Plast with a Valuation Grade of ’5/5′ and fundamental grade of ’3/5′.

Hitech Plast Ltd (Hitech) reported strong Q4FY11 results, in line with CRISIL Equities’ expectations. Growth in revenue is mainly on account of the strong demand for containers from the paints and the FMCG sector. The pressure on margins was, as expected in view of the rising polymer prices and the lag in passing the same to end users. Hitech declared a dividend of Rs 1.6 per share, subject to approval.

The low float of the company as well as the disclaimer I have in the post of Jan 2011 here still holds true. I am still holding the stock at a purchase price of 125 (Added few more small position) and will not be on the sale side below 150. I have also made sure this article goes live on weekends, so you have ample time to do your own research before taking your decision.

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First trades.

At 10:21 I purchased Hexaware technologies at a price of Rs 70.30, sold off at 10:32 making a loss of roughly 500 bucks for my position.  At 2 PM I again purchased the same stock at much higher price.

You may be thinking me as mad now – selling lower buying higher right?  Let me share with you my madness story.

I saw news floating around for Hexaware technologies and as I saw the daily chart for the stock I assumed it a break out above 70 Rs. To add to my madness, saw few very large buy orders at 70 Rs and so I thought those buy orders will not allow the price to fall below 70.

So with a stop loss of 70 I jumped into the stock but as soon as the stock went below 70 I was out of it.

My mistakes

1. I jumped into the trades with no research whatsoever and was trying to follow the news and order volumes. I mentioned in my book why both are useless, still I could not resist myself to those mistakes. Luckily I was taught my own lessons for 500 bucks.
2. I took the trading decision so instantly that I even did not bother to see the technical charts like daily, weekly, monthly … Probably a feeling of missing out on a big gain.

I don’t prefer to buy the same stock again on the same day after squaring off but Hexaware was different. I spent few hours doing some research about the company. Stock price rise was because of good earnings reported by company in last few quarters and same is anticipated this time as well. Moving to technical’s I saw the yearly chart as follows.

65 Rs was peak for the stock and in the recent run up it broke above 65 Rs.

At price of 70+ we missed some steam in the stock but it is still that kind of stock which is fundamentally cheaper and so I expect some more upside. So I purchased the same stock once again on the same day at 70.35.

Guess what? The next day stock hit a low of 67.50.

This time I had a stop loss of 65 (i.e. above the previous peak break out) and so I did not panic. Remember Chart Patterns Can Save You From Panic Selling and now I am making handsome returns in Hexaware because it is trading well above 72.

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Many reader’s had the question – why I was complaining on a 45,000 Rupees gain in couple of months on an investment of 500,000 Rupees. The answer was (and is) – I could easily beat that. So today I will share with you how.

Let me first show my trades. I Purchased 615 share’s of TTK Prestige around price range of 1995.

Click on images to enlarge.

Hold for a day and sold off at close to 2080.

I thought I purchased 600 units only and did not realized that I had few more in my account and so finally sold rest of my shares the next day. You can see the date and time for my trades.

How and Why?

Reason for my purchase of TTK Prestige was purely technical. Look at the 6 months chart of TTK Prestige. Shows a break out chart pattern above 1974 and was consolidating above the breakout level. So I took an anticipated trade (You know how to handle anticipated trades from my chart pattern book). I saw positive sentiments in the market especially the consumer durables sectors and timed my entry into the stock almost perfectly.

I could not time my exit well enough or else my profit would have been 50% more but I was not ready to risk my huge profit.

Performance

When I reviewed Sharekhan PMS I did a lot of performance comparison and so it would be unfair if I don’t compare my own performance.

I made a gain of roughly 4%. Nifty for the complete week Nifty was up by almost 4.8% and though I did not trade much on the Friday still I would say I could not better Nifty for the week yet was not very far behind but still a miss mainly because of a huge upswing on Nifty on Friday.

Let us compare my performance with one of the best performing fund i.e. DSPBR Small and Mid Cap Fund Growth. It had a NAV of 16.31 on 22nd March and 16.82 on 25th of March i.e. I would have gained 38k on my investment whereas I made more than 50k for myself. I would also have been charged an exit load of 12k as well. Clear an out-performance by a BIG BIG margin.

Final Thoughts

Remember I am not a full time trader and my main job is online blogging and so If I could perform in the market better than the best fund then anybody who is willing to learn can. There is lot of money to be made provided you are willing to learn.

Charts by Interactive Broker’s Trader Workstation. Image Credit : Harsh Agrawal

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First the headline JPMorgan upgrades Unitech to overweight; target Rs 60.

I don’t buy the theory that JPMorgan is ready to do service for the Indian retail investor by making public it’s financial research about Unitech. My concerns are

1. How suddenly the land valuation becomes higher when everything related to interest is going down?
2. Suddenly JPMorgan’s take on the pending receivables is positive. Unitech from an over debt situation gets into a position of 3000 crores receivables.
3. Double PAT with no solid reasoning as to how will this be achieved.

And many more.

The only reason I see for such a crappy report is they (or some of their big clients) have a large holding in the stock which they want to offload. See how the increase in volumes for the shares yesterday and you know who could be the potential sellers.

Make sure you are not trapped with such crappy news. If you have read my book you should know how to play this to your gains. The idea is when the volume starts declining make sure you short the stock in the spike. I hope this helps all my follow investors.

Charts by Interactive Broker’s Trader Workstation

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But there are many question which still remains are.

1. How these AMCs will treat their existing funds?
2. Will these funds become yet another equity fund or will they switch the money to some other equity linked funds?
3. Will they ask investor to forcibly redeem?

What are your views on DTC?

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Let me go about telling you why I like this stock and also what can work against you before buying the stock. The recommendation is purely based on fundamentals and not technicals and for fundamentally good stock you should always opt for a long term view.

So let us start.

Positives

1. Strong fundamentals with great business – HiTech Plast is into business of making plastic based containers and packaging products for few of the biggest brands in India like Asian Paints, Dabur and others. Visit official website to know more about the business of Hitech Plast. The benefit of hitech plast is purely based on the Indian growth story because more people buy those products more container’s will be needed.
2. Cheap valuations – According to IndiaEarnings and moneycontrol.com the EPS of the company is 10.13 and is currently trading at a PE of less than 11. Book  value of 45 which means it is available at a price of less than 3 times its book value. There are very few companies who are into such container packaging business but if you consider Supreme Industries they have a book value of less than 30 and so comparatively very attractive valuations.
3. Reputed Management – Chairman of Hitech Plast is Mr Aswhin Dani – the man behind Asian Paints.
4. Reliance capital has 400k+ shares – Month back Reliance capital acquired 400k+ shares of Hitech Plast at a price close to 120. See the news here

Negatives

1. Small company – As per Yahoo Finance the company has a market cap of only 1.44 Billion which means there will be very few mutual funds and FII’s who would be interested in this stock.
2. Low float and low volume – There is hardly any volume being traded in HiTech Plast. As per Yahoo Finance Average volume per day is only 8000 shares.

Final thoughts

If you have a long term view and are willing to accumulate the stock in small quantity, this stock can prove to be a good value in your portfolio.

Disclaimer

Normally it is always the general disclaimer but HiTech Plast is a very small company with very low number shares being traded and so your action can make the price for this stock to spike and so I think it should be fair for people to know my investment in this stock. I have an investment of over 5 lacs in the stock at a price of 125 Rs and I have no plans to sell it before 148 Rs as of now. I have also made sure this article goes live after the market close and so you have ample time to do your own research before taking your decision.

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Let us see hourly chart (Each candlestick represents an hour) of Titan for 1 month

You can see some numbers in the above chart so first let me explain what they represent.

No 1 – This is the time between first of November to roughly 12th of November when Titan Industries was trading between 3800 and 3850.

As market was bullish we see a classic breakout pattern and stock prices raise.

No 2 – With the first leg of correction 3800 for Titan is clearly held. The reason such support being held is because of multiple investor sentiments. Many people think that it is a good correction for stock price to invest in and some think that 3800 was a good opportunity missed and so this can be a good entry point for them again.

In a few trading session we see support of 3800 is decisively broken.

No 3, 4, 5 – 3800 now becomes a strong resistance. Three attempts to break out of 3800 resistance but as the market sentiments are not very bullish the stock forms a triple top and remains below the key resistance level.

Friday was a shocker for markets and as expected Titan tumbles more because it was already trading below the key support of 3800.

Why the support becomes resistance?

The answer is sentiments. Neither the fundamentals of Titan changes at 3800 nor they change at 3600 or at 4200 but what changes are investor sentiments. 10+ days of stock trading in 50 Rs range and so there can be lot of category of investors who invested in this stock.

Many investors who had this stock saw a price rise up to 4200+ and now when the sentiments turn bleak and stock trades below their purchase price they think that if they can get capital back they are fine and so lot of people start selling at the price closer to the purchase price and so the support for the stock becomes a resistance.

The other group of people are short sellers who believe that as stock is below a key resistance level and as market sentiments are not very bullish it is the right level to short the stock.

Friday was a bad day for market where major Indian index swings were in range of more than 20% from high to low but I predicted TTK Prestige has support around 1400 last week only and you can clearly see the same from the Friday chart of TTK Prestige.

Apart from a bleak 40 minutes of trading below 1400 most of the time stock remained above 1400 and also bounced of the support of 1400 thrice on a day where complete sell off was on indicating it is one of the strongest support for the stock.

I hope this helps many small retail investors predict support and resistance for stock.

Share your views and feedback in comments below.

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First let us see hourly chart (Each candlestick represents an hour) of TTK Prestige for 1 month.

We see that there is lot of consolidation and sideways movement between 1st November and 10th November between the price range of 1375 and 1425.

When market corrected as expected this stock also corrected and on 19th November we see a strong bounce after touching low of 1400. Support held.

Today (23rd November) also we see a very strong bounce from low of 1438.20. Once again support held.

Now let us look at somewhat longer term view for this stock. Let us see the daily chart (Each candlestick represents a day) of TTK Prestige for 6 months.

We clearly see the step chart pattern where stock consolidates for few months and then moves higher. In the month of September I made a solid 20% in this stock (See the details here).

Remember there was no correction in the markets for last 6 months and so stock also showed no correction.

When the market corrected stock also did correct and held its first support and so I think this should be a very good long term buy.

Fundamentally I am sure many will agree that this stock is over priced. As per Moneycontrol.com TTK prestige EPS is 58.25 & Book Value of 107.77 and so PE of more than 25 but then if you compare it with other good rural demand stocks like Titan or Asian Paints, TTK prestige is trading at only 25 P/E.

I have scheduled this post to go live after trading hours so that you don’t buy this stock in a hurry but do your homework because remember I only share my personal views for education purpose only. I will still suggest don’t go with my recommendations but find such multibagger stocks for yourself.

Charts are from my Interactive Broker Application

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Now I am very concerned for those investors who are still asking question on TV, Is Coal India an Investment Opportunity after listing and at current market price of 330+?

I saw on CNBC Awaz that some house views and expert are still recommending Coal India as buy call if you have a 1 to 2 year investment time horizon but I totally disagree with it. I think it is by no means an investment call at current levels. Trading is fine but not an investment call at all.

Let me tell you why I do not agree with the investment opportunity.

Many experts suggest that it is an investment call because of the fact that it has very good fundamentals with good cash levels as well as some good acquisition lined up in next few months especially the one in Africa.

To those so called experts I will like to remind them that acquisitions always dampens the share price and we have seen things like that happen for Tata Steel or even for Bharti Airtel. So if acquisition is your base for recommending a buy call I think it should be when the IPO sentiments cool off. I am sure more positive sentiments can lead to yet higher prices but that means it is a trading call and not an investment call.

Some experts recommend a buying Coal India because of Indian Government links and I ask them why they not recommend buying NTPC or NHPC or even REC (which has given some handsome returns). All have good fundamentals and Indian Government link and this is what we see for the last one year performance.

So according to me Coal India is not an investment opportunity as of now but once it cools down we can take a call then. What are your views on Coal India? Share your views in comments below because we can all gain from the shared wisdom

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My friend has suggested me to buy Samtel Color at 16 telling me that it may go upto 50 – 60 levels in short term .and the source is tried and tested.

Can you suggest anything
I am thinking of buying upto 15000

To which my reply was

Tarun, Stay away from that stock. Your friend’s tried is tested is very doubtful for multiple reasons.

1. The stock is hitting circuit without any news. Looks phishy to me
2. The stock is hitting circuit and so you will not be able to get that many shares and your buy order may actually make it run-up
3. I do not see any reason for it to go bizzare.

Ask your friend to tell you the fundamentals or technicals of the stock and why he thinks such a big run is expected. You can share with us here and we can suggest if it is something really that good to triple in weeks.

You can sense that I was seeing the stock movement as doubtful.

First let us look at the 1 week chart pattern for the stock. At 12:50 PM today this is what we see.

Clearly we can see that there was some interest in the stock starting On October 21st 2010. This is when Tarun also asked the question.

As you can see in my reply to Tarun, I searched Google to see the reason for the interest and if there is any news floating in the market. I could not find much of information and so stock was moving without any news.

I started to follow the chart pattern of the stock because I was sensing some money to be made here. No no not investing but doing a trade on the short side.

Now let us look at the chart pattern of the stock for today.

I saw an opening high volume trade but that did not last long and so I shorted the stock at 19+ but the stop loss for the stock for me was 19.75 i.e. days peak where we saw maximum volume. If the stock moved above 19.75 on good volumes my trade would have been a bad trade and I would have come out of this stock on stop loss. Remember not only the price but also the volumes were needed for me to trigger my stop loss.

Now from almost 9:45 to 10:15 roughly I saw that stock is neither breaking out of 18:80 nor breaking down 18:70 but still the volume was low and so I expected the stock to break down but still covered my half position at 18:80. Soon after the cover as expected the stock broke on the downside. This is when I covered my all the position. I still expect the stock to go down further but then not much from here to my likings.

So next time you get tips about stock doubling, tripling in short term do some check on why the stock can double in such a short span of time.

I will update this post tonight when I get my Contract Notes and this is when you can clearly see my trading time as well as the price

Finally my question is how reliable are your tips and where do you get your tips from? Share in comments.

Update : Trade Details Attached

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