Nov 23, 2013

Natural Gas Still a No-Conviction trade on buy side. Read when to buy or sell for 4-12% moves

Indian Natural Gas prices, Natural Gas price in India, Natural Gas MCX Trading Calls, Natural Gas tips, Natural Gas MCX Calls

Natural Gas prices on MCX are hovering between 215 and 230 for almost 2.5 months now, after it made a high of 257.10 on 4 September 2013.

Natural Gas enthusiast think natural gas are in for a big ride up. But it is not so convincingly.
Even rupee slide did not helped the natural gas price to go past 260 and reach close to 300.
Tradign speculation at time could do this if the prices sustain above 240 for few weeks, otherwise not.
We recommend to buy and trade but do not hold for beyond breakout gains. Book out around 240.
If you want to ride on then wait for conviction trade on long side above 240 when it once makes new high above 257.10 and then builds base around 240 with time lag. Then and then only we can start building up long position for a target of first 272 and then 300 eventually. We beiliev the run up to 300, if happens as described, should be accompanies by rupee depreciation as well and not just backed by rise in natural gas price in dollar terms.
Having said all of the above, we find better conviction trade on short side. We believe that the prices will collapse below 200 (of course it will take support at 205 levels). We will initiate short trade once natural gas tries to break resistance level around 240 and fails and start falling. We will not wait a bit to short. In that scenario first target will be 215 levels. Then 205 and lower. However, natural gas has been a commodity which remain in a narrow range for a long time and range-expansion (as in Dows Concept of range-expansion and range-contraction) takes less time.
The range-contraction phase does not allow more than 5% return, while range-expansion phase allows 5-35% return and average return of 10% which a positional trade following 'averaging up' or 'inverse pyramiding' technique of trading can reasonable accept.

Nov 16, 2013

Now Companies can list without IPO on Institutional Trading Platform of SME listing platforms of the Exchanges

Indian capital market regulator Sebi has issued detailed guidelines, including on eligibility criteria, for listing of start-ups and small and medium enterprises (SMEs) on stock exchanges without an initial public offer (IPO).
The guidelines follow notification of new norms by Sebi earlier this month for permitting listing of start-ups and SMEs on Institutional Trading Platform (ITP) of SME Exchanges.
Through this new route, the SMEs and start-up companies would not need to make a public offer of securities for getting listed in the stock market.
The move would help SMEs and start-ups raise capital from the securities market during their early stages of growth, as lack of exit opportunities in case of unlisted companies come as a major hindrance for small companies to get capital.

As per the new guidelines issued in October 2013, a company would be eligible for such listing if it has not completed a period of more than 10 years after incorporation and its revenues have not exceeded Rs 100 crore in any of the previous financial years, among others.
In addition, the company should have got an investment of at least Rs 50 lakh by an alternative investment fund, or a venture capital fund, or by a merchant banker, or an angel investor, or a specialised international multilateral agency, or a public financial institution, among other such investors.
As per rules regarding capital raising by SMEs, the norms said a company may raise funds through private placement or through a rights issue.
In case of a rights issue, there shall be no option for renunciation of rights and the company seeking to get listed on ITP shall agree to make necessary amendments to its articles of association to this effect.
The market regulator has asked the promoters of SMEs not to hold less than 20 per cent of the post listing capital of the company and the same shall be locked-in for a period of three years from date of listing.

According to the norms, an SME would be required to exit the ITP within 18 months if it has been listed on the platform for a period of 10 years or it has paid up capital of more than Rs 25 crore or company has revenue of more than Rs 300 crore in the last audited financial statement, among others.
The company can also take a voluntary exit if it has the approval from its majority shareholders.
Moreover, a company would be removed from the platform if it fails to file periodic filings with the recognised stock exchange for more than one year and does not not comply with corporate governance norms.
The regulator has asked the stock exchanges to "execute a listing agreement with companies seeking listing on ITP in line with the Model listing agreement" and implement the amendments.

SEBI to come out with stringent guideline on CORPORATE DISCLOSURE by listed companies

SEBI Chairman UK Sinha, addressing a capital market summit organized by FICCI said that there are 1100 companies which are not compliance with the requirement of clause 35 of shareholding pattern, which means the direction with regard to shareholding pattern has not complied with. Also, there are 900 companies which are not compliant with the corporate governance norms as per clause 49.

He signaled that the Securities and Exchange Board of India (Sebi) plans detailed guidelines on corporate disclosures, aiming to improve the quality of giving out information by companies. He indicated that to improve the quality of corporate disclosure, SEBI will, probably announce guidelines on Monday or next week.
He also said that they will have a relook at the delisting guidelines. About delisting, Sebi also had earlier indicated that SEBI will now become a party to the delisting agreement between the company and the exchange. It is notable that in a recent case in which the company’s advocated argued that SEBI has no say in matter of listing agreement as it is not a party to the agreement.
The Chairman also said that Sebi may look at the rules for preferential allotment of shares by companies.

Clause 35 of the Listing Agreement requires listed entities to submit to the stock exchanges on a quarterly basis, a statement of its shareholding pattern providing details of shares held by promoter/promoter group and public and details of shares held against Depository Receipts.

Nov 2, 2013

Percentage gain required to recover percentage loss

There is reason why big names like Warren Buffett and others in investment and trading put focus on 'not losing' money as their first rule.
When you lose money, you have to recover it first and get even before you make any profit on the initial or starting capital.
What happens is that when you lost money from the start or out of the initial investment or margin money in case of trading, you have to earn more in & terms to get even.
Above is the table depicting how much more you will need to make when you lose out of your capital and margin. If you understand the important of the same you will make your investment and trading decisions differently. This is perhaps one of the foremost important fundamental of risk management in stock trading and risk management in investment.