Category: General

Numbers and Graphs Speak.

I thought of starting my articles from some Analysis on Akruti City Crash .

In this article we will learn , how can we before hand get some idea about events like this and have clear picture of whats going on .

See my previous posts on Warning about Akruti City : Post 1 , Post 2 , Post 3

– Lets see 2 yrs old chart first

If you see the chart you will see the steep rise in prices in last month , you can also see that its was not a normal price movement , when compared with previous movements .

For a closer view , lets see 3 months charts

If you see the chart you will see ,that prices moved up crazy and then crashed in two stages .

First Downmove : This happened because of the news that SEBI is excluding it from F&O segment . (If you dont know F&O , dont worry) .

Second Downmove : Second downmove came near 25-26 Mar , when it was F&O expiry . What happened ? Lots of positions were built up in F&O and after a sharp upmove , everyone rushed to get out as fast as they can , at any price . So selling pressure came in and prices tanked 45% .

See High Volumes in the month of March (3rd half of the graph) . Suddenly there was so much participation . Most of the buying which was happening on this stock was not for long term basis (delivery basis) .

What is Delivery Basis : delivery buying means , people actually get the stock in there demat accounts , it simply means its delivered physically to there account , But when you buy in the morning and sell the stock in evening , then its not delivery basis . you just make profit or loss same day .

Lets understand an important concept called “Deliverable Percentage” , which simply means , percentage of shares out traded shares which are actually delivered .

So if its higher , it means that most of the buying and selling is happening for delivery basis and people want to keep it with them for some time , When its too low , it means lot of trading (speculation) is going on to catch the pie in the price movement and hence its not sustainable most probably .

Example :

So , for some XYZ company , if volume is 100 shares and and deliverable % is 50% , it means that 50 shares where delivered and 50 were speculated , which is normal ..

But if its 20% or 10% , then things are fishy , there is no value buying happening and shares are just exchanging hands from one to another where each one wants to sell it at higher price , also there are people who want to buy the shares at higher price , because they know that there will be some idiot who will buy from them at much higher price to continue the madness .

And when it ends then what happens , There are no buyers !! , every one has sold at lower prices and then suddenly the selling madness comes in and the bunch of people who get out first (at higher prices) make the most money . And in this pressure everyone is ready to sell at a lower price than someone else .

You can easily imagine that day price movement , see 26th Mar downmove of 45% crash .

So how do we find out that this is happening , Is there some place we can get data from , and the answers is nseindia.com website , it has all the information on needs to know .

Source : https://nseindia.com/content/equities/eq_scriphistdata.htm

Go here , choose 3rd radio button (Security-wise Price volume & Deliverable position data) , and choose share name and dates for which you want data . You will get all the data .

You must see “Price” , “Total Traded Quantity” , and “% Dly Qt to Traded Qty”, you will get good idea at looking it .

But I will not leave you with boring looking numbers . I have taken the AKRUTI data for 3 months (Feb 1 – Mar 27) and then smoothed it with 5 period moving average for each of them and then plotted it on graph , so that you can get the picture pretty well .

The points do not represent the actual value , it only shows you the relationship of each other . see the below graph .

If you enlarge the chart , you will see this relationship

Price : Prices picked up and start moving up . (Orange line)

Traded Quantity : You will see how it started moving up wildly and picked up a pick high speed in March (3rd half portion) (RED line)

Deliverable % : you will notice that it started going down and down , which indicated that even though Traded quantity is going up and up , the delivery is not happening , which means lots of speculation , which is an indication of a building of Bubble which can burst anytime .

So whats the learning , If you see Price movement in one direction and see Rising Traded Quantity and falling Deliverable % , you should suspect the move . It is normal to some extent , but an extra ordinary move is truly suspectable .

And whats happening now to Akruti ?

from last some sessions there is no buyer , only sellers are there and from the peak price of 2100 levels , its now down to 380 (at the time of writing) . I had already warned of this long back , dont take it as any success in prediction of stocks 🙂 .

If you see the current Volumes of Akruti , it was 2137 on NSE , where as average volume was at 4.5 lacs !! , Which means that this down move is not supported by volumes , (watch volumes in 2nd chart , you will see nothing) .

Its just the fear of handful traders who have no idea why they are selling . So we can again expect some wild moves on upside in future when prices starts picking up .

Conclusion : When you see prices moving in one direction without any great fundamental change or significant news , You can use the numbers and see there relationship and you will see something which most of the people have no clue about .

Disclosure : I had learned this technique from Mr. Sunil Saranjame blog , timamo.blogspot.com , an excellent market reviewer as per my thinking . So credit goes to him .

Please join jagoinvestor google groups , see the upper right area at the start of the page , I will be sending instant notifications about the post and we can also share options trades there or some other stock trades when there is good opportunity . Also who all have not left there comments/suggestions , please do so on the suggestions/comments post

I also Introduced my self in the last post , see My Introduction

“People who take some pain eventually Gain”

Have you invested in the peak of bull run (Nov Dec 2007 or Jan 2008) or in middle of this downturn (Mid of 2008) and now sitting on heavy losses.

In this article we will discuss how and why should we avoid it. This article mainly covers investors who invest there money in some share for relatively short term like 6 months to 2 years, even though its applicable for all kind of investors.

Robert bought 100 shares of Jaiprakash Associates around May 2008, at Rs.300. His reason was simple, The stock has fallen “a lot”, “how low can it go? “, ” What if I don’t buy it and it goes up again, I will miss the profits”.

Does it sound similar?

Then stocks moves upto 350, and he is so furious that why he didn’t out more money. within some days stock comes down to 250. Now he feels that he probably made a mistake and made investments at right decision. He was sad that he is now in loss , he says to himself, that he will get out at cost once it moves up to 300.

Now it comes down to 200, He is not thinking why didn’t he get out at small loss? He is not ready to get out at 250, and he is determined to get out. But it never happens and stock tumbles down to 160, Now he tries to play a trick with market, and wants to prove his point that he is also smart.

He triples his shares by buying additional 200 shares by buying the share at 160 and averages his price to Rs.207, He can now get out once shares move to Rs.200 or 210 and he can get out at cost price or may be he can make some profits also.

But stocks still goes low and reaches low of 45-50. At the time of writing this article, the price for the share is around Rs.90. Probably it will take at least 1-2 yrs for this share to reach Rs.200 levels and that will happen once overall markets stabilizes.

Does all this sound similar to you?

What are the wrong decisions Robert made?

1. Trying to Time the Market :

The one reason was that he was trying to find out if share has made a low. He believes that share has lost a lot of value and will not go further.

Learning : There is an old saying, “Dont catch Falling Knives”, When a share has started its down move, the chances that it will move more down is more than its going up. The overall mood is bad. There is no MRP of shares, there is only market value. Prices are governed by emotions and sentiments, Don’t try to get in middle buying them. Rather short sell it or wait more.

2. Patience :

The other problem was no patience, Just imagine if this person had more patience, What if he waited for stock to go as low as possible and then start its journey upwards and then buy it. I am not saying, its a right time to buy, but current scenario provide much better risk/reward ratio.

Learning : Don’t go against the trend, if markets are falling like hell. don’t mess with it by buying in between. Have patience, No profits are better than losses I guess. Always try to be with the trend, A stock has more chances of going in the same direction of the trend rather than counter trend.

On the day Satyam bad news came in, I don’t know why people bought shares in between it was falling, It fell from 170 to 40-50, But people bought it in between around Rs 120 levels, thinking, “How low it can go”. Eventually some people bought it at 20-25 levels and many have doubled there money in weeks.

Patience helps.

3. No Stop loss or Targets set :

Often people emotions come in between there trading or investing. “If only it comes back to Rs XYZ I will get out”, Once it goes up by Rs PQR more, I will get out”.

People invest without knowing there risk capability, They don’t invest with some target, once your shares rises by 20% in 1 month, you may often think, what if it goes up to 50%, then I will miss out those profits.

They also don’t want to take losses, they only want profits, once prices go against them, they are not ready to get out at small loss. They want there money back. Then prices move a little more down and then this vicious circle of “If only it comes back to this point, I will get out” continues

Learning : Do you invest to be right or to make money. What is your goal? I guess its to make money. So don’t feel bad if you are wrong some times, it happens with everyone. The most important thing is to not let it become so big, that it becomes pain.

Have a stop loss, When you buy something at 300, say to your self that if it comes down to 250, I will take Rs.50 loss and accept I was wrong and move on to find out a new opportunity. And also tell yourself that if it moves to Rs 500, I will get out, take my “excellent profit” and then find out some thing else. Don’t be too greedy.

It hurts in long term. “just a little more” is a not a good idea.

You can read a similar article where I discussed 5 mistakes of my First trade.

Watch this video to know why no Retail Investors make money in the Stock Markets:

Conclusion :

The main idea of investing is to make money, don’t try to prove market that you were correct and no one can make you wrong, keep your emotions at home, If you are wrong, you are wrong, Just accept it, take small loss and try to find out new opportunity. Don’t waste time with the losing trade and give all your time and effort in that.

Know some rules and stick to it. Mainly this is applicable to traders whose time horizon is very less like day or a week, but this also applies to investors. Even if you are investing for long term like 10-20 yrs. Buying a share at low cost can have dramatic affect on your corpus. Just imagine this :

Ajay invests 1 lac in Unitech at Rs.150 just after it fell from 900 levels in Jan 2008. His investment after 30 yrs was 66 lacs.

But Robert waited patiently to let this share go as much down it can be and after markets shows some strength and signs of recovery bought it at Rs.30, His corpus would be Rs.3 crores.

Just imagine the difference of having some patience and respecting some ground rules of investing. It pays .. believe me.

Keep coming to the blog as in coming days I will post an article about how a common person can use basic technical analysis to make his investments more powerful and less risky.

Question for readers : What do you think Robert could have done better? Or How what are the other mistakes which I have not mentioned?

Please post your views/comments/questions. Make it interactive.
I hope you have read my article on : How to use your losses to reduce your taxes

That’s all for now.

Akruti crashed by almost 45-50% today . This happened inspite of strong global clues and strong rally in markets which touched 3100 levels on nifty .

From the levels of 2250 some days back , today its near 900-950 levels .

This crash was due anyways … Some days back I had warned that there was a Evening Star seen on this stock charts and It should be seen as a shorting Stock on every rise . read it here : https://www.jagoinvestor.com/2009/03/akruti-city-plunges-25-in-early-trade.html

Read my previous post how to invest in this market

Evening Star shows you the shift of power from bulls to bears . Markets were near expiry and all the punters who were holding the stock from the time of strong rise which started , had to clear there positions and hence a sharp selling was expected . No Surprise that it happened today , As markets were rising , every short term long holder wanted to clear his positions , this resulted in panic selling and stock went down so much .

Now it has come to its normal levels and with this strong rally , it has good chance to move up in coming weeks . Dont over invest incase you want to invest .

You can put 10% of your capital in this and liquidate half position after you are in 20-30% profit . It can give some quick gains later . Dont be greedy , sell in profit once you are in 50%+ profit . otherwise one fine day again it will drop heavily and you will be left crying .

Why am I now suggesting to invest in this , last time I said stay away ?

Investing or trading should be done on high probability trades . This stock went up heavily and then corrected a lot to come back to normal levels now . This is a ideal time to take calculated risks , The risk/reward of this trade would be worth taking .

It does not mean , you cant loose from here , why not !! , but its worth taking that risk , because profit potential is very good . Have a logical stop loss and once its hit , get out with loss .. first loss is the best loss .

Did any one make profits or loss on Akruti ? Share it with other readers , so that everyone comes to know about it .

Read my previous post how to invest in this market

Double in a week ?

If you are watching Markets , you must have seen the movements of Akruti City . This company is a Mumbai based Company . The shares of this company is on the roll from last 10 days . In just 1 week it has zoomed from 994 on march 9th to 2145 on Mar 18th , that’s roughly a week .

Note : Please vote on the question asked on the upper – left hand side of this blog .
Also see the update on Jaiprakash Associates after todays markets action on my analysys blog , click here

So, Now the company market capitalization (13421 Cr) is second highest in Real estate sector , just next to DLF (29229 Cr) . Its suddenly 3 times more valuable than Unitech !!

see list of real estate companies with market capitalization

My God !! , whats going on !!

90% of the equity is with promotors , and a very small fraction is with retail public , you can understand that everything going on is just the “kartut” (hindi word) of minority public .

Agreed that anyone who has entered the stocks some days back or 2 days back or 1 day back has made exceptional profits , But is it a right decision to invest in this as of now for short term gain or to ride the trend . A big NO!!

For sure some insider trading is going on with company , that’s the reason why stocks has gone mad . Retail Investors must not get very excited with these kind of things , These kind of sharp moves are not sustainable , to move in a healthy way , the stock must form a base (spend some time in a range ) and then start its up move slowly and with some corrections in between .

These kind of mad up moves without any pauses and slowdown are nothing but a bomb ready to explode .

If like someone who just entered the trade 1 week back and made 100% gains , other person can also loose 60-75% in just 1 week from now onwards . If you put money in this , Its not investing now , its Gambling !!

Suggestion : please stay away , Dont forget the mantra of “Not loosing money” rather than “Trying to get fast money” in stock markets . If you are bothered about lost opportunity , I can bet there more opportunities in market every day than all the combined opportunity in the world in all other aspects of life . Wait for just 1 day and you will get thousands of opportunities again .

see detailed news on :

Note : Please vote on the question asked on the upper – left hand side of this blog .