How to find multibagger ideas in Stock Market?

The recent downfall in the stock market has created opportunity for the investors to start looking into Equity. Often people come up with the question on how to find the multibagger stock which would create wealth for them?

Today I’ll provide tips and tricks of finding hidden gems from the stock market.

Business you understand:

Ask yourself one question, if you would have got enough money, time, and skills to start on the business which business you would have picked to become next Narayan Murthy?

Identify all such businesses which you understands, which you would like to do or would have done, if given a chance. This is really important, because it’s about achieving your dreams.

Companies in your business:

Once you identify these businesses that you want to start with, identify companies having presence in the same sector/business. Make a list of such companies based on their size. i.e. largecaps, midcaps, smallcaps. Now start comparing these companies based on different parameters like,

- Management:

o       Check management skills by reviewing their interviews, their confidence in the company, how they started the company?, Ownership in the company. Do they love their business?

-    Last 3-5 years results :

o       Check past performance of all these companies. (EBITA , Profit)

-   Corporate Governance:

o       Try to figure out the strength of the company by checking obligations made against it. It at all that is true then how they are dealing with it?

-    Future growth, Scalability :

o       Make sure that the management is right on track with expansions and they have vision to take the company to the next level.

You can add your own parameters as well, which you would try to meet for your own business. Once you find answer for all these parameter you’ll get true hidden gems for your self.

Own a stock or business:

I know it’s not possible for everyone to start business not that they don’t have skills but there are constraints like, personal commitment, finance, family, good job, risk and many other things. But, Is it stopping you from executing your idea? I don’t think so. Now with this exercise you’ve ignited the energy to live your dream. Now you’ve found the same company/business which you would have established, if given the opportunity. More over, these companies have decent experience, growth prospects and management who are equally passionate about the business as you are. In other word, it’s basically you own part of the company, doing the same business and still not sacrificing on your current commitments.

Sounds like excellent deal? Yes it is.

It makes sense to mention here, “Warren Buffet owns stake in many companies/business. He is having CEO and MD of different company reporting to him. But guess what, He is still able to sleep in the afternoon? “Yes that’s correct.

Hope this would help all the readers in finding their own hidden gems !!

Please click here to become expert in riding investor behavior in stock market.

Happy Investing !!

Risk VS Stock Market

People use to come and ask me "Is it safe to invest in Stock Market??". They don't want to take risk for the money which they earned by truly working hard for it.

This article is dedicated to all such investor who could earn more by parking their money in right investment instruments.

Please take a look at the below year on year comparison for the Sensex only. You'll see average return of 22 %. Even if you don't know anything about stock market this is just simple calculation and you would have earned lot of money by investing in Equity and Equity related instruments over the period.

Sensex Valuation
Year	First Trading Day of Jan	Last Trading Day of Dec	% Change
1991	999.26	1908.85	91.03
1992	1957.33	2615.37	33.62
1993	2539.62	346.06	1.75
1994	3465.86	3926.90	13.30
1995	3932.09	3110.49	-20.89
1996	3127.94	3080.20	-1.37
1997	3260.56	3658.98	12.22
1998	3694.62	3055.41	-17.30
1999	3060.34	5005.82	63.57
2000	5375.11	3972.12	-26.10
2001	3955.08	3262.33	-17.52
2002	3246.15	3377.28	4.04
2003	3390.12	5838.36	72.23
2004	5915.47	6602.69	11.62
2005	6679.2	9397.93	40.70
2006	9390.14	13708.34	45.99
2007	13942.24	20286.99	45.51
2008	20300.71	9647.31	-52.48
2009	9958.22	17464.81	75.38

Above comparison shows that investing in the stock market for longer period always rewards you with handsome return. Make investment as your habit and do it for long term.

For new investor or people who don't have time to check market pulse daily, I would recommend to investment in Mutual Funds. You'll be amazed by some of the Mutual Fund Performance.

Below table gives you idea about the enormous wealth a MF could create for you over the period of time.

Value of Rs 1 Lac - Invested in NFO
Company Name	Launch Year	Initial NAV	Present NAV	Today's Valuation
Birla Sun Life Mid Cap Fund	Oct'02	10	104.84	10,48,400
Sundaram BNP Paribas Select Midcap Fund	July'02	10	134.99	13,49,900
Reliance Growth Fund	Oct' 95	10	427.35	42,73,500

I would advice all the small investor to start SIP - Systematic Investment Plan to invest into MF schemes. This is the best method to start investing in Equity. This is same thing like recurring deposit you are aware of. Only difference is the return you get here. In recurring deposit you'll hardly get return of 6 % which has no comparison with MF returns where you'll get much more return for your valuable money. I'll come up with new article about MF schemes which has great track record for creating wealth for investors.

In country like India we have higher inflation. Most important if you'll check Food Inflation which is necessary for common man it's around 18 %. Do you think parking your money into Bank FD's would help you to sustain in the environment?

I won't answer this question. Take your own call and now rethink if investing in stock market or equity related investment instruments is risky or You are at much higher long term risk by not to investing in the stock market.

I'll come up with some more articles which will really change the way you think investing in the stock market.

Happy Investing !!

Godrej Properties Listed at Rs 510 as suggested

Godrej Properties got listed at Rs 510 per share as suggested in my blog post on this Sunday.

Click here to read the details.

Godrej Properties has touched intraday Rs 586.70. I already indicated this fact in my previous article under Company fundamental section "Qualified Institutional Investors looks quite bullish on the stock, which can add some premium to the counter on the listing day. If this continues you'll see appetite for the stock from Mutual Funds, HNI and Retail Investors"

As I anticipated Godrej Properties has given good return to the investors on the listing.

Now what’s next?

- Lets wait for stock to form base for now. It's likely to settled down around 535-550 Levels.

- Nifty is moving upwards which is good indication.

- Global markets are supportive as yesterday US markets were up and today Asian markets were buzzing.

- Today we had extremely strong breath. We can sense it from Advance Decline ration.

- People who already have position in the stock should continue holding it but keep a stop loss of Rs 495. New position could be taken if stock moves above Rs 575 levels.

Happy Investing!!

Godrej Properties IPO listing

Godrej Properties equity shares will list on 5th Jan to the stock exchanges.

Earlier company has come up with IPO of 9429750 equity shares of Rs 10. Issue was open for subscription from Dec 9 to Dec 11. Company has got good response from qualified institutional investors where it got subscribed 7.45 times. Retail investors and Non institutional investor quota were not fully subscribed.

Company has fixed share issue price at Rs 490 per share, which is lower end of price band Rs 490-530. It has collected more than Rs 460 cr. from this IPO.

Reason for IPO:

- 30% of IPO money would be used for debt repayment.

- Company will acquire land development rights for upcoming projects, investment in new projects.

Company Fundamentals:

Positive:

- Company carries brand name of Godrej. Godrej Industries holds 80.26% in the company.

- Operates in the real estate sector where demand is likely to pick up in upcoming years after current slowdown.

- Qualified Institutional Investors looks quite bullish on the stock, which can add some premium to the counter on the listing day. If this continues you'll see appetite for the stock from Mutual Funds, HNI and Retail Investors

Negative:

- Many brokering houses have downgraded real estate as sector.

- People look more skeptical regarding turn around in the sector.

- Larger players are available in the market as cheap valuation.

Listing Price:

I see Godrej Properties to list around Rs 500-510.

Long term investors should wait for initial market reaction to get into the stock. One can buy this stock during market correction.

Happy Investing!!

Nifty Options Strategy for Jan Series

As we are seeing nifty ending almost to the high point of year it’s giving real comfort to the Bulls.


For last couple of days nifty is trying to break it's key resistance level of 5200. I suggest following option strategy for the next Jan series.
Strategy is derived to make use of Market Volatility. I believe in month of Jan we'll see very high volatility.

Options Strategy:
Buy 5100 PE - Current Price Rs. 93.50
Buy 5300 CE - Current Price Rs. 85

Total Money Paid: 8900 Rs.

Ideally you'll start making money nifty above 5350 and nifty below 5150 if nifty crosses the levels within first two weeks.

I'll keep you posted about when to exit this position.

Happy Investing!!

Stock Recommendation

Market is in range now so it's time to pickup the stocks which correcting from their highs and have potential to do well in next breakout.

I would go for two such stocks,
1). OBC Bank : Oriental Bank of Commerce
This stock is excellent pick amonst banking sector. Stock has corrected almost 10% in just 2 days and today it's likely to form some base and start moving upwards in next couple of weeks.
I recommend buy for the stock from the short to medium term.
Current Price :- 249.20 Rs
Target Price:- 271-275 Rs.
Stop Loss : 236 Rs.

From the medium to long term target could be 291-305 Rs.
2). IDBI Bank :
It's one the best pick amonst MID-CAP PSU Banks. It's having excellent track record.
Stock has correct almost 9-10% after touching 52 week high as some of the PSU bank stocks have corrected. As per the pattern created by IDBI, it's making higher top and higher bottom.
It's likely to cross it's highs and expected to give 12-15% in near term.
I recommend buy for the stock from short to medium term.
Current Price: 129 Rs.
Target Price : 142-146 Rs.
Stop Loss : 116 Rs.

Medium to long term stock could go upto 155-165 Rs.

Hope this Swing Trading idea will help you in better trading.

I'll come up with some more gems !!