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Stocks Corner: A GUIDE to intra-day TRADING
We asked readers to mail their queries about stocks they want to buy, sell or hold. Here's the response to their queries.
Narendar Lokwani of StockFundoo advises about good, bad and ugly stocks.
You can mail your queries to stockfundoo@rediffmail.com.
Can you please guide on intra-day trading. Which are good stocks to trade on intra-day basis? Also some tips on trading would be helpful.
Narendar Lokwani:
Intra-day trading is a challenging task and an aspiring trader should have the infrastructure ready before jumping in this business. Things to do before you start trading:
Get fast trading terminals like NSE NOW or ODIN from your broker. Nowadays almost all brokers offer these terminals used by professional traders. Since intra-day trading is all about speed and precision, web page-based trading sites would be slow for you to quickly enter or exit a stock. Trading Terminals such as NSE NOW or ODIN help you to enter or exit a stock with just one click.
It's imperative to get access to live intra-day trade data when you decide to trade markets on an intra-day basis. A lot of traders use free web sites which provide delayed quotes or rely on broker's data, but you won't be able to draw good quality stock charts and technical indicators using free web sites or delayed quotes. It's worthwhile to pay small fee to get access to high quality live intra-day data to trade successfully and have that extra edge.
Trade a small number of stocks everyday and remain in your comfort zone. There are 160+ stocks in the F&O segment of NSE, but a trader should focus on maximum 10 stocks to trade on intra-day basis. It's not a good idea to move from one stock to another as you lose focus and probably end up trading stocks which are new to you and don't fit with your trading style and strategy. Pick 5-10 stocks beforehand and trade just those to make money!
Back-test, back-test and back-test! Importance of developing your strategy and back-testing it thoroughly can't be taken lightly. One should adopt only a handful of trading strategies and remain faithful to your strategy even when chips are down. It doesn't help to change your trading style and technique everyday or as soon as you hit a stop-loss. Paper-trade your strategy for at least a 6-month period, so that you have 1 to 2 robust strategies and remain loyal to your strategy to make money consistently.
Money management is imperative and is most important factor for you to remain in this business for long. Treat intra-day trading like a business and risk only a small amount of money, preferably 2 per cent on each trade. Meaning you can take a trade with your entire capital, but your stop-loss and net loss on each trade should not exceed 2 per cent of your total account. This means that it will take 50 back-to-back losses to wipe out your account, which is almost impossibly. Lot of beginners bet their entire account with a single trade and wipe it out in a few trades thus getting out of trading before they could learn it well. Trade safe, trade long, trade profitably.
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Any use of the information /any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
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Stocks Corner: A GUIDE to intra-day TRADING
I have one query regarding Jubilant Foodworks. I am holding the stock from Rs 750. In last one month it has corrected almost 25 per cent from Rs 1397 high. Can further investment be done at current levels, or shall I wait for further fall? Since fundamentally it's an excellent bet, but still trading at rich valuations of 54-55 PE. Please suggest.
Narendar Lokwani: Jubilant Foodworks is a concept stock, and these stocks when they are in market's favour, do not seem to mind valuations. The stock is currently trading at a huge Rs 7,250 crore market cap and 55 PE-ratio and still trading very strong!
Jubilant Foodworks operates Domino's Pizza brand with the exclusive rights for India, Nepal, Bangladesh and Sri Lanka. The company operates 515 Domino's Pizza Stores and is the market leader in India for the organised pizza market with a 62 per cent market share and 70 per cent+ share in the pizza home delivery segment.
Dunkin' Donuts was the second global brand that the company launched recently. Firm has 7 Dunkin' Donuts restaurants in India and is poised to grow this number. Dunkin' Donuts is the world's leading brand for Donuts, baked goods and coffee, bagels and muffin categories.
Looking at charts, the stock received good support at Rs 1025 levels from where a good double bottom has formed on EoD charts. Rs 1250 is the next resistance point and can be achieved in few days' time. However, if Rs 1025 breaks, one can see lower levels of Rs 730 as well. So, further investment is slightly risky though one can hold the stock with Rs 1025 stop loss.
Stocks Corner: A GUIDE to intra-day TRADING
I have many shares of Kirloskar Electric bought at a price of Rs 312. Now, the stock has fallen to unimaginable levels. What do I do? Can u please help?
Narendar Lokwani: Kirloskar Electric Company (KEC) is one of the leading Indian electrical engineering companies and was established in 1946. KEC produces more than 70 products under eight product groups for core economic sectors such as power generation, transmission & distribution, transportation, and renewable energy.
KEC comprises nine manufacturing locations and 34 sales offices spread across the country. They also acquired a German firm Lloyd Dynamowerke (LDW) which will strengthen their business.
If you see the last 5 quarter's revenue details, top-line has been stagnant at around Rs 200 crore per quarter and EPS has been inconsistent a bit. Probably declining profitability is one of the reasons that stock price has been stagnating as well.
Promoter shareholding has been consistent at 49.29 per cent and firm is now trading at low market cap of Rs 105 crore, so it is severely undervalued like lot of other mid-cap and small-cap firms in the markets recently. There is no need to sell your holdings at a loss, though high price range of Rs 312 is unlikely to appear. You can look at averaging when the firm gets back to a decent growth path. Price level of Rs 68 is possible in next 12-18 months.
Stocks Corner: A GUIDE to intra-day TRADING
Please advise me on the following stock. I am in deep loss. I have 1000 Kesoram Industries @ Rs162 per share. Now, the stock has fallen to Rs 105 levels. What do I do?
Narendar Lokwani: Currently the Indian stock market is divided in two distinct groups. On one hand you have companies such as large caps and top Nifty firms like ITC, TCS, HUL etc which are beyond their all time highs, and on the other hand, you have forgotten mid-caps and small-caps which are trading at their 5 year and 10 year lows.
Market seems to have adopted a risk-off approach for small-caps and most of the investment money is seriously getting invested into only the handful of top 50 stocks, ignoring the next 500 odd good quality scrips.
Kesoram Industries is the flagship company of BK Birla group and is a ninety-year-old firm doing business in variety of segments such as cement, tyres, tubes, rayon, paper, pipes and heavy chemicals. The firm has not been profitable from past two years, which has taken a toll on its share price and market cap, which sits at a lowly Rs 465 crore for a firm with over Rs 5000 crore of annual revenues.
The firm has huge debt of Rs 4000 crore and is trying to reduce its debt to a more reasonable level. Promoter shareholding is less at 27 per cent, though private corporate bodies are increasing their shareholding from 10.6 per cent to 13.9 per cent in recent two quarters. Firm has been a regular dividend paying entity as well.
Technically speaking, Rs 84 is a recent support and it can be revisited as well. Next set of resistance levels are at Rs 145, Rs 175 and Rs 235 which could be revisited in next 12 months time-period.
Stocks Corner: A GUIDE to intra-day TRADING
I have 200 Transformers and Rectifiers @ Rs 256 per share. I am in deep losses in this stock. Please advice.
Narendar Lokwani: Transformers & Rectifiers has a good position in Indian transformer industry as a manufacturer of a wide range of transformers. This firm also exports to developed countries such as Canada and UK, in addition to catering to the domestic Indian market. T&R has the capability to develop world-class power, distribution, furnace and specialty transformers and boasts of world-class infrastructure at Changodar, near Ahmedabad. Firm deals in power transformers, distributor transformers, rectifier, furnace and reactors as well.
With Dec 12 results, the firm is back in profits, though slump in revenue was evident in past 2 quarters. Firm has clean balance sheet with low debt, and best part is very high promoter holding at 76.82 per cent which is hallmark of a great company. Current market cap at Rs 133 crore is very low for this firm and current price is a good price for you to average and hold for longer term.
Technically speaking, stock is gapping down and should get support at Rs 101, below which there is no support evident. One should see levels of Rs 125, Rs 175 and Rs 210 in next one year.