Reblog: ‎The 10 Key Takeaways From Arun Jaitley’s Fourth Budget


Perhaps the biggest plus of this budget is that it brought no negative shocks. And no bad ideas like farm loan waivers.

Hence the massive relief rally on Dalal Street. And the economists are relieved that foolish ideas have been given the go-by.

Arun Jaitley’s Union Budget for fiscal 2017-18, his fourth, is notable precisely for its lack of fireworks. Given the context of demonetisation and the need to stimulate growth, the budget did not propose major concession to too many sectors, barring real ‎estate. In fact, Jaitley passed up the opportunity provided by DeMo and a forthcoming shift to a goods and services tax (GST) regime to break out of the fiscal deficit straitjacket. He accepted the 3 per cent target for 2017-18 as one he will try to achieve while giving himself leeway up to 3.2 per cent, which is lower than 2016-17’s target of 3.5 per cent. The direction of fiscal consolidation is consistent and prudent.

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Reblog: 20 years of demat – A move that transformed share trading in India


Along with electronic trading, introduction of dematerialization—conversion of physical shares into electronic form–in the mid-90s was the other radical move that changed the character of the Indian market forever, and for the better.

It gave another leg-up to the Indian market in its quest to rub shoulders with its global counterparts, eliminate frauds by companies and brokers, improve the efficiency of stock exchange clearing houses, reduce brokerage rates and attract more FIIs.

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Reblog: The ABCD and the Three-Drive


The ABCD

Let’s start this lesson with the simplest harmonic pattern.  So what could be more basic than the good old ABC’s? We’ll just pop in another letter at the end (because we’re cool like that), and we’ve got the ABCD chart pattern!  That was easy!

To spot this chart pattern, all you need are ultra-sharp hawk eyes and the handy-dandy Fibonacci tool.

For both the bullish and bearish versions of the ABCD chart pattern, the lines AB and CD are known as the legs while BC is called the correction or retracement. If you use the Fibonacci retracement tool on leg AB, the retracement BC should reach until the 0.618 level. Next, the line CD should be the 1.272 Fibonacci extension of BC.

Simple, right? All you have to do is wait for the entire pattern to complete (reach point D) before taking any short or long positions.

Oh, but if you want to be extra strict about it, here are a couple more rules for a valid ABCD pattern:

  • The length of line AB should be equal to the length of line CD.
  • The time it takes for the price to go from A to B should be equal to the time it takes for the price to move from C to D.

Three-Drive

The three-drive pattern is a lot like the ABCD pattern except that it has three legs (now known as drives) and two corrections or retracements. Easy as pie! In fact, this three-drive pattern is the ancestor of the Elliott Wave pattern.

As usual, you’ll need your hawk eyes, the Fibonacci tool, and a smidge of patience on this one.

Bearish Three-DriveBullish Three-Drive

As you can see from the charts above, point A should be the 61.8% retracement of drive 1. Similarly, point B should be the 0.618 retracement of drive 2. Then, drive 2 should be the 1.272 extension of correction A and drive 3 should be the 1.272 extension of correction B.

By the time the whole three-drive pattern is complete, that’s when you can pull the trigger on your long or short trade. Typically, when the price reaches point B, you can already set your short or long orders at the 1.272 extension so that you won’t miss out!

But first, it’d be better to check if these rules also hold true:

  • The time it takes the price to complete drive 2 should be equal to the time it takes to complete drive 3.
  • Also, the time to complete retracements A and B should be equal.

Here’s a forum thread discussing the ABCD pattern and a trade setup with the three-drive pattern.


Sensex, Nifty post biggest weekly gain in 8 months; Airtel rallies 4.8%


Benchmark indices settled the day on a higher note, extending gains for the fourth day straight, as investors remain optimistic ahead of the Union Budget next week. Better than expected corporate earnings also aided the sentiment.

Nifty, Sensex posted their biggest weekly gains since May 27, led by gains in banking and financial stocks.


Reblog: Investing is not Rocket Science! Here’s Why…


Owing to its irrational nature, people often assume that investing in the stock market is a rather difficult affair. Many even compare it to gambling and consider it impossible. With the amount of negative opinions regarding the stock market, it seems like a place where everybody loses. We have to set the record straight, once and for all.

Investing is not rocket science and investing in the stock market is relatively easy to manage if you do it the right way. Your mindset is the one stopping you from investing and it will be the one that will help you invest. Everyone has their own opinions about the market and a lot of people make it difficult for themselves, more than necessary.

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Reblog: BSE Ltd IPO review


 Logo

Issue Summary

After demonetization, the market went for tail spin with standstill activities in the primary market. However, the long waited IPO of BSE is taking a lead to break the ice for CY 2017 as well as final quarter of FY16-17 as the first main board IPO.

BSE LTD (erstwhile known as The Bombay Stock Exchange) is the premier and the oldest stock exchange of Asia (established on 9th July 1875) and has become the most trustworthy brand as far as stock market is concerned and has become the synonyms with its Sensex and Dalal Street.

Today BSE is the world’s largest exchange by number of listed companies (5,329), India’s largest and world’s 10th largest exchange by way of market capitalization, with US$ 1.7 trillion in total market capitalization of all listed companies and the world’s fastest stock exchange. It has now also become the first stock exchange to go public in India and has thus become the first mover. BSE has diversified products for trading is also providing IT services and solutions, listing business, marketing business, data business etc.

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Reblog: 2 Moving Averages that Beat Buy and Hold


2 Moving Averages that Beat Buy and Hold

Most the investing establishment considers buy and hold investing the Holy Grail that always works out in the long term. For long term buy and hold investing your entry time frame matters, whether you got in at good prices and if you have time after bear markets to get back to even. NASDAQ buy and holders waited a long time from March of 2000 and buy and holders from 2007 also had to wait many years to get back to where they were. The most simple long term moving average systems can beat buy and hold by getting and keeping you in during bull markets and getting you out before big drawdowns. You are capping your downside risk and keeping your upside potential profits open by simply having an entry and exit strategy based on price action not opinions or predictions.

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Nifty ends the week below 8,350 on poor Q3 results


Benchmark indices continued trading under pressure as investors remained cautious ahead of inauguration speech of Donald Trump as US President and after disappointing Axis Bank’s earnings.

Nifty 50 breached its 8,400 level dragged by Axis Bank, Bank of Baroda, Adani Ports and ACC while BSE Sensex fell as much as 296 points at intra-day.

S&P BSE Sensex settled the day at 27,034, down 274 points, while the broader Nifty50 ended at 8,349, down 85 points.

Among broader markets, BSE Midcap index fell 1.5% while BSE Smallcap index fell 0.1.2%.

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Reblog: Quality Companies, Compounders and Value Traps – Investment Masters Class


sees-candy

Many of the great investors evolve over time to focus on high quality companies.  In the post ‘Evolution of a Value Manager’ I outlined how Buffett, with insight from Munger and the acquisition of See’s Candy transitioned from seeking cheap companies [ie cheap PE/, price/book etc] to trying to purchase high quality companies at reasonable prices.  Li Lu and Mohnish Pabrai are two Buffett disciples who have made a similar transition.

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Reblog: The Dhandho Investor


Value investor Mohnish Pabrai wrote The Dhando Investor: The Low-Risk Value Method to High Returns (Wiley, 2007).  It’s an excellent book that captures the essence of value investing:

The lower the price you pay relative to the probable intrinsic value of the business, the higher your returns will be if you’re right and the lower your losses will be if you’re wrong.

If you have a good investment process as a value investor, and you’re focused on cheap and good companies with low or no debt, then you are likely to be right on roughly 2/3 of your investments.  Because losses are minimized on the other 1/3 – due to the low price paid – the overall portfolio is likely to do well over time.

Mohnish sums up the Dhando approach as:

Heads, I win;  tails, I don’t lose much!

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