Stock Market Education

After a severe bout of under performance, Bank Nifty finally joined the Bull party; adding fuel to the fire. Even as the front line  indices along with the Mid-Cap indices gained around 2%, the Bank Nifty outperformed by posting outstanding weekly gains of around 10%. Bank Nifty has always played a key role in previous Bull Market Rallies, and if the current Rally needs to go up any further, then Bank Nifty will have a key role to play. This week, Nifty overcame the strong Resistances provided by the weekly Trendline (11407) as well as Bearish Gap (11384-11536), and is now headed higher towards a Target of 12267, defined by the primary Reversal pattern of Bullish Cup & Handle. A Bearish Gap at 12012-12071 will test the Nifty before achieving the above mentioned Target. Weekly Trendline (11407) which was overcome last week; will now act as Support Technically Speaking :- Sensex opened the week at 38566, made a high of 39579, low of 38545 and closed the week at 39467.Thus it clos...

COCHIN MINERALS & RUTILE LTD. CMP 134 ENTRY 130 TO 135 STOP LOSS  111 TARGET 270++ TIME: 18 MONTHS CMRL is manufacturing the best quality Synthetic Rutile across the World. CMRL is India's largest manufacturer of Aqua Ferric Chloride which conforms to all major International Standards. CMRL Plant is ideally located at Edayar Industrial Development Area, hardly 15 Km. from Cochin Port and 100 Km. from the Ilmenite deposits. The Company started production with a modest capacity of 10000 TPA of Synthetic Rutile and 12500 TPA of Ferric Chloride. Subsequent through innovations and debottle-necking, the Company enhanced its production capacity of Synthetic Rutile to 50,000 TPA, Ferric Chloride to 30,000 TPA, Ferrous Chloride to 82,500 TPA and Cemox to 20,000 TPA.          It has an equity base of just Rs.7.87 crore that is supported by reserves of around Rs.69.46 crore. The Promoters hold 52.31% while the investing public holds 47.69% ...

Financial Ratios The best and the easiest way to analyze a company, is by studying its financial ratios.Benjamin Graham, popularly known as the Father of Fundamental Analysis, popularized the theory of financial ratios. Financial ratios not only help in interpreting the financial results of a company but also allow comparison of them with previous year's results and also with financial results of other companies operating in the same industry. When we compare financial ratios of a company for the current year with the ratios of the same company for past few years we come to know whether the performance of the company is improving or deteriorating financially. When we compare financial ratios of a company for the current year with the ratios of another company operating in the same industry and of the same or similar size then we can come to know which company is financially better to invest in. Hence no person should invest in a company until he has analysed its financial ratios. W...

  Even as the Nifty faced Resistance at the Weekly Rising Trendline (Nifty 11419); there was no stopping the Mid-Cap Index (up by around 4%) and Small-Cap Index (up by around 5%). The action has clearly shifted to the small and mid-cap universe. Even as Nifty continues to climb higher, the cause of concern is the steep slope of daily Rising Trendline. The speed of increment in Nifty is lower than the increase in value of daily Rising Trendline (11233), which is an indication that a bearish breakout cannot be ruled out in the near future. Nifty continues in a Trading Range (10800-11500), the upper boundary of which is defined by the daily Bearish Gap (11384-11536) and the lower boundary by the critical 200dma. One would do well to focus on the mid-cap and small-cap stocks as that is where the percentage gains lie. Technically Speaking :- Sensex opened the week at 38062, made a high of 38788, low of 37734 and closed the week at 38434. Thus it closed the week with a gain of 577 po...

  FLEX FOODS LTD CMP 65 ENTRY 58 TO 60 STOPLOSS   50 TARGET 120++ TIME: 12 MONTHS   Incorporated in 1990, Noida based Flex Foods Limited cultivates and processes food products in India. It offers vacuum freeze dried, air-dried, frozen, and individually quick frozen product range of mushrooms, herbs, spices, fruits, and vegetables; and canned button mushrooms in various shapes and sizes. The company also provides thyme, basil, parsley, dill, mint, sage, savory, pickle, chervil, marjoram, rosemary, chives, and oregano culinary herbs. It exports its products to the United States, Europe, Asia, and other countries. In its pursuit to supply high quality product to its customers, Flex Foods Limited sources its raw material through contract farming through a dedicated network of 500 farmers. This is done in about 2500 acres of land in and around Dehradun, providing the farmers with the high quality seeds, imparting best farm practices, following strict MRL and assured buy...

  Financial Ratios Profitability Ratios Part -1   EBITDA Margin (Operating Margin): Earnings before Interest Tax Depreciation and Amortization (EBITDA) Margin is measurement of a company's earnings before interest, taxes, depreciation and amortization as a percentage of its net sales.   EBITDA Margin = EBITDA / Net Sales   This important financial ratio tells us about the company's profitability (in percentage terms) at the operating level. Hence it is also known as Operating Margin. It tells us about the efficiency of the management and operational efficiency of the company. EBITDA Margin can be useful for comparing different companies from the same sector having different capital investment, debt and tax profiles.   PAT Margin: Profit After Tax (PAT) Margin is measurement of a company's net profit as a percentage of its net sales.   PAT Margin = PAT / Net Sales EBITDA Margin is calculated at the operating level where we consider only operati...

After a long time, the Bears seem to be making a comeback of sorts, which was visible in the late afternoon fall on Friday. The Bulls seem exhausted after witnessing a sharp vertical rise of over 51% in the Nifty. After dropping from a high of 86 to a low of 16, the Volatility Index, India VIX,seems to have bottomed out and is making a comeback. Repeated failure of Nifty to cross the Weekly Rising Trendline (11395), which is also the upper boundary of the Trading Range (10850-11400), is a cause of concern for the Bulls. Smaller Rising Wedge has been completed and the fall will now accentuate if Nifty closes below the steep Rising Trendline at 11155. Once again Mid & Small Cap Indices have outperformed the Nifty for the past week, and looks set to continue with their out-performance.   Technically Speaking :-   Sensex opened the week at 38168, made a high of 38556, low of 37654 and closed the week at 37877. Thus it closed the week with a loss of 163 points. At the same ...

  TOURISM FINANCE CORPORATION CMP 42 ENTRY 38 TO 41 STOP LOSS 20 TARGET 75++ TIME: 18 MONTHS   Tourism Finance Corporation of India Ltd.(TFCI) has been set-up as an All India Financial Institution,pursuant to the recommendations of "National Committee on Tourism" set-up under the aegis of Planning Commission in 1988. The main object of setting-up the specialised financial institution was to expedite the growth of tourism infrastructure in the country by providing dedicated line of credit on long term basis to tourism related projects in the country. TFCI provides financial assistance by way of rupee loan, subscription to equity / debentures and corporate loans mainly to hotel projects, amusement parks, ropeways, multiplexes, restaurants etc. With a view to diversify in other related areas, TFCI has expanded the scope of its activities by including financing of infrastructure projects, real estate projects and manufacturing projects to a limited extent, within the scope...

       Financial Ratios  Profitability Ratios Financial Ratios can be broadly classified into   1. Profitability Ratios 2. Liquidity Ratios 3. Management Efficiency Ratios 4. Leverage Ratios 5. Valuation Ratios Profitability ratios are used to evaluate the company's ability to generate income as compared to its expenses and other cost associated with the generation of income during a particular period. These ratios convey how well the company is able to perform in terms of generating profits. Profitability ratios are the most popular ratio used in fundamental analysis of securities as it is the profits which are not only need for business expansion but are also needed to pay dividends to shareholders of the company. Some of the commonly used Profitability Ratios include – 1. Gross Profit Margin 2. EBITDA Margin (Operating Margin) 3. PAT Margin 4. Return on Equity (ROE) 5. Return on Capital Employed (ROCE) 6. Return on Asset (RO...

WEEKLY MARKET OVERVIEW After being witness to a stupendous one way Rally of over 50% in Nifty and Sensex, the focus now seems to be shifting. The figures this week suggest that the Nifty has now settled in a Trading Range from 10900-11400. The lower boundary of this Trading Range is a result of 200dma and a constantly rising Trendline (which continues to defy gravity). The upper boundary is a result of Historical Weekly Trendline obtained by joining bottoms made in Oct 2018 and Sep 2019. Even though the weekly gain for the Nifty was above 1% but the action has clearly shifted to the Mid & Small Cap arena; both of which registered a weekly gain of 4% to 5%. To register good returns in the near term, one should focus on good Mid & Small Cap stocks; till the time Nifty gives a breakout of the Trading Range which it has got into. Technically Speaking :- Sensex opened the week at 37595, made a high of 38221, low of 36911 and closed the week at 38040. Thus it closed the week wi...

PONNI SUGARS (ERODE) LTD CMP 175 ENTRY 168 TO 170 STOPLOSS 145 TARGET 240++ TIME: 12 MONTHS Ponni Sugars (Erode) Limited is a public limited company, incorporated under the Companies Act, 1956 and domiciled in India. It is an associate of Seshasayee Paper and Boards Limited. It has a sugar factory at Erode having a capacity to crush 3500 tonnes of sugarcane per day and generate 19 MW of power. With an equity capital of Rs.8.60 crore and reserves of Rs.238.86 crore,PSL's share book value works out to Rs.287.80. The promoters hold 42.36% of the equity capital, FPIs hold 21.17% (Normally FPIs are not buying shares of below Rs.200 crore market cap so it is very good sign) which leaves 36.47% stake with the investing public. For Q1FY21, PSL reported 908% higher PAT of Rs.5.04 crore on sales of Rs.61.46 crore and an EPS of Rs.5.86. During FY20, its PAT grew 267.02% to Rs.30.94 crore against Rs.8.43 crore in FY19 on 67.98% higher sales of Rs.310.49 crore fetching an EPS of Rs.35.98...

Introduction to Financial Ratios Benjamin Graham, popularly known as the Father of Fundamental Analysis, popularized the theory of financial ratios. Financial ratios not only help in interpreting the financial results of a company but also allow comparison of them with previous year's results and also with financial results of other companies operating in the same industry. When we compare financial ratios of a company for the current year with the ratios of the same company for past few years we come to know whether the performance of the company is improving or deteriorating financially. When we compare financial ratios of a company for the current year with the ratios of another company operating in the same industry and of the same or similar size then we can come to know which company is financially better to invest in. Hence no person should invest in a company until he has analysed its financial ratios. While computing and studying financial ratios remember one important...

Surpassing one Resistance after another had become a ritual for the Market, but there was a twist in the tale for the week gone by. It took the Weekly Trendline Resistance at 11344 to stop the rampaging Nifty in its one way upward journey. It started with formation of Bearish Harami on Wednesday, the top of which lay exactly at the Weekly Trendline Resistance. The fall in the Nifty finally found Support at the lower boundary of daily Gap at 11244-11035. For the week ahead,strong Support will be seen at the Weekly Gap Support at 10953-10933 followed by 10860 which is the 200dma. On the positive side, only a weekly closing above Nifty 11344 will negate the bearishness of past week.   Technically Speaking :- Sensex opened the week at 38275, made a high of 38617, low of 37431 and closed the week at 37606. Thus it closed the week with a loss of 522 oints. At the same time the Nifty opened the week at 11225, made a high of 1341, low of 11026 and closed the week at 11073. Thus the Nif...

Standalone and Consolidated Financial Statements Standalone Financial Statements show the financial position of the company alone without taking into consideration of its subsidiaries, joint ventures or associate companies. Consolidated Financial Statements show the financial position of the company itself along with its subsidiary companies, associate companies and joint ventures. There are many single entity companies which do not have any subsidiaries, joint ventures or associate companies. Such companies will have standalone financial statements.On other hand companies that have number of subsidiaries, joint ventures or associate companies,will declare standalone financial statements of the parent company as well as consolidated financial statements of the entire business group. In case of some companies, especially big corporate houses or conglomerates the standalone financial statements do not provide any meaningful insight as the main and more activities are done by its su...

AGARWAL INDUSTRIAL CORPORATION LTD CMP 80 ENTRY 75 TO 80 STOPLOSS 65 TARGET 150++ TIME: 36 MONTHS   The Company is a leading manufacturer and importers of Bitumen & Bituminous products and its plants are located at Belgaum, Hyderabad, Taloja, Baroda and Cochin (Company's WOS). Company manufactures and trade quality products like Paving grade Bitumen. Industrial Grade Bitumen, Bitumen Emulsions,Modified Bitumen, Bitumen Coat, Bitumen Paints, Bitumen Insulation material etc which are known for their quality and standard. Its profound background of being in the logistics business (transportation of Bitumen & LPG) has been a key factor to foray into this segment. Company has excellent professional relations with all major road contractors in India due to Company's ethical, transparent and good governance policies. Company has excellent Bulk Bitumen Storage facilities to effectively  handle and market bitumen imports at Karwar, Belgaum, Hyderabad, Haldia, West Bengal...