Raghuram Rajan arrives with a bang. Raghuram Govind Rajan - The New Governor of Reserve Bank of India

Raghuram Govind Rajan who took over as the 23rd Governor of the Reserve Bank today said, " India is a strong economy with great future."

Wish him to bring good administration and solve the major issues. 

Jet Airways & Spice Jet hikes fares by steep 25% - due to turbine price increase

Jet Airways & Spice Jet hikes fares by steep 25% - due to turbine fuel price increase. The move comes in the wake of a nearly 25 percent fall in the rupee against the dollar and a recent 6.9 percent hike in aviation turbine fuel.

Jet Airways today followed its smaller rival SpiceJet and hiked fares by a steep 25 percent to mitigate the impact of the sharp fall in the rupee value and a near 15 percent spike in oil prices of late.

Budget 2013: Sector expectations and likely impact on stocks

Banking
Expectation: To allow banks to float tax-free infrastructure bonds or other source of long term funding with tax incentive to address long term funding needs; issuing of Banking Licences.
Probability of Outcome: Medium
Impact on Sector: Positive for banks, as this has been a long standing demand and would address asset-liability mismatch. New Bank lincenses Negative for incumbent banks as it would increase competition.
Capital Goods
Expectation: Extension of Levy of import duty on power transmission equipment
Probability of Outcome: Medium
Impact on Sector: If implemented, it would be positive for capital goods
Impact on Companies:  Positive for all T&D based capital goods companies
Infrastructure
Expectation: Re-introduction Increase of tax-deduction under section 80 CCF
Probability of Outcome: Medium
Impact on Sector: It would increase the debt availability in the sector
Impact on Companies: Positive for Infra developers
Power
Expectation: Extension of existing provision of 10-year tax holiday to 15-Years for Power plants and exempting power projects from service tax net
Probability of Outcome: Low
Impact on Sector: Generators to benefit
Impact on Companies: All utilities
Media
Expectation: Lowering of import duty on Set-top boxes
Probability of Outcome: Low
Impact on Sector: Any cut would be sentimentally positive newsflow for DTH companies
Impact on Companies: Positive for Dish TV, SUN TV
Telecom
Expectation: Incentives to telecom equipment manufacturers
Probability of Outcome: Medium
Impact on Sector: This would be an incentive to vendors to set up manufacturing base in India.
Impact on Companies: Bharti, Idea, Rcom
Real Estate
Expectation: Extension of exemption under section 80IA, Increase in tax rebate limit for interest and principal repayment for purchase of house for self-usage, Extension of 1% interest subvention on home loan and Re-introduction of tax holiday for affordable housing projects.
Probability of Outcome: Low to medium
Impact on Sector: Good for large housing projects, tax rebate positive for end-users and interest subvention postive for positive for low ticket size residential projects.
Impact on Companies: DLF, Ansal, Omaxe, Sobha, Prestige, Oberoi, DLF, Godrej Properties, HDIL, Unitech, Ansal, Parsvnath, DLF, Unitech
Oil & Gas
Expectation: Additional excise duty on diesel cars; Export parity on refined products vs trade parity currently
Probability of Outcome: High; Medium
Impact on Sector: Government to benefit fully, and OMCs partially since. Carmakers would be hurt
Impact on Companies: Positive for MRPL, Chennai Petroleum. Mildly negative for RIL, Essar Oil.
Pharma & Healthcare
Expectation: Currently a weighted tax deduction of 200 percent for R&D expenditure in an in-house facility is available. Industry is requesting for it to go up further (to 250-300%) and exemption being made available for expense in external R&D as well.
Probability of Outcome: Medium
Impact on Sector: Positive, as it would encourage higher spending on building new drug Pipeline, which is critical for the sector All Pharma
Metal & Mining
Expectation: Change in guidelines for dividend payout by PSUs, increasing it from current 20% of PAT/ equity; Continued divestments in FY14
Probability of Outcome: High
Impact on Sector: Given the budget deficit, chances guideline changes are high, so that government can reap special dividends; Large cap PSUs can benefit from increase in free float and liquidity.
Impact on Companies: NMDC, COAL, SAIL
Auto
Expectation: Marginal hike in excise duty; Duty on diesel vehicle
Probability of Outcome: Low
Impact on Sector: Given the weakness in auto industry sales, an excise duty hike is unlikely and a pass-through would further delay the demand recovery in the sector.
Impact on Companies: Negative for Maruti Suzuki, Tata Motors, Mahindra and Mahindra, Bajaj Auto, Ashok Leyland
Cement
Expectation: Increase in excise duty
Probability of Outcome: Medium
Impact on Sector: High prices in cement sector may see the government increase excise duty
Impact on Companies: Negative for ACC, Grasim, Ultratech Cement Andhra Cement, India Cements

India budget factor, See no Big Bang moves in Budget; bullish on market:

The Budget is unlikely to make any path breaking policy changes. Key things the market will be eyeing are tax changes, progress of UID, fiscal consolidation and NREGA spending. On the issue of a possible tax on the wealthy, most people will not be averse to paying their fair share of taxes. On the broader market,  the direction is northward than southward.

The trouble with Indian psyche is that lust for gold and real estate. We don’t want to look at equities, which makes no sense. As a country we are deeply under owning equity. In the course of this bull market this under ownership will correct and when the pendulum swings we will go from under ownership to over ownership.

What is going to propel the change? I think returns. Ultimately if the market delivers superior returns on a consistent basis people will come back to the market as they always have done.

By investing in gold and real estate right now you are perhaps investing at the top of a cycle at least in some of these asset classes.  It is disappointing given the fact that capital gains are tax free, dividends are tax free in India that more people are not investing in equity. I think for whatever its worth that they are being short sighted.

 

The Exit is Just as Important as the Entry

In trading and investing, most of the focus is placed on entering trades with very little regard as to when to exit or close these trades. How can I say this with certainty? Is it not a fact that most investors make money in bull markets and then give back the majority of their gains in the ensuing bear cycles that follow? Do you think that would happen repeatedly if they had an exit strategy in place? I think not.

Many traders don’t have a problem pulling the trigger when it’s time to enter the market, so much so that they typically buy when prices are elevated and then have to suffer when the market pulls back.  They hold on in hopes that the uptrend resumes, and if they’re lucky, it does, helping them to bail out of their losing positions.   If this is indeed the case, this means that many investors pay little attention to the price they pay when getting in.  This is puzzling to me since buying low and selling high is the only way I know of to make money buying and selling anything.

So if traders don’t have any issues entering the market, why is it then, that when it comes to exiting their trades people have such a hard time.  There are (in my humble opinion) several reasons for this.  The first is simply a lack of planning. When a professional enters a trade he knows precisely what conditions have to be in place to trigger an exit. Moreover, he doesn’t have to think about, or second guess those conditions when they occur, he simply acts.

The novice trader on the other hand, is driven by the “what ifs” of emotion and impulsive decisions. The thought process goes something like this:  “What if I sell now and the market continues higher, I’ll miss out on bigger profits,” or, “What if I don’t take my profits now and the market goes lower.”  And my personal favorite for avoiding loses,”if I never sell, then I’ll never lose”.  Sometimes a novice trader is forced to exit simply to relieve the pain of a losing a trade. Another common exit used by the inexperienced trader is when a losing trade returns to the price point where he initially entered the trade.  The trader is usually very eager to sell here as this will make him whole again.  As you might imagine trading in this manner is not conducive to long-term success, and yet it continues until the losses mount and the trader simply leaves the markets in disgust. Alternatively, a trader can learn to adhere to specific exit strategies which can help in harvesting profits on a consistent basis.

There are many exit strategies that can be deployed depending on one’s trading style and risk temperament.  In class I spend a considerably amount of time on exit strategies because I understand that this is one of the areas where a new trader faces some of the biggest challenges.

Specifically, the basic exit would be using a supply and demand zone.  Simply, if we buy in a demand zone we can use the nearest supply zone as our profit target. Another technique some traders apply would be to use a moving average as a trail mechanism and exit trigger. Regardless of the technique, a trader must have an exit planned out BEFORE he enters the market. By doing so, he will reduce the emotional and impulsive behavior that comes from watching the profit and loss column fluctuate back and forth when in a trade. At the end of the day, a good entry without a solid exit strategy isn’t really a good plan after all.

Online trading shares and equities with loss ! Wasted Time?

There is a lot of pressure for new traders to profit from trading immediately. Most of this pressure is self-imposed. The newer trader may feel that they need to “pay off” their trading education or computer equipment as soon as possible from trading profits. This will often lead to them falling into one of the trader traps that will likely destroy their account: overtrading!

When traders leave a live class or even an online Extended Learning Track, they often feel empowered.  They are indeed empowered, but must use it to their advantage, not against themselves.  They are likely to try and take as many trades as possible in order to get as much live market experience as possible as soon as possible.  This would be like practicing cricket improperly.  If you practice bowling like an American throws a baseball, you may get great speed but will never be able to hit the wickets after bouncing the ball off the pitch to get an out.

Traders need to be selective in choosing what to trade.  This is the proper practice part. 

Not trading is valuable too.  All too often we try to force trades that do not give us the three key components I just mentioned.  I have heard many traders complain that they can’t find a good demand or supply zone to trade.  There is nothing wrong with that!  If you do not see a great level then you should not trade.

I have often sat in front of my trading computer for hours without executing a trade.  I trade to make income so this can be quite frustrating.  But I know that getting into a trade that loses money is more frustrating than not trading at all.

Even if you are not executing actual trades you are still gaining valuable experience in watching and examining the markets.  This restraint is something to be envied.  Most traders learn the hard way by overtrading and decimating their accounts before they realize that it would have been better to sit and wait for a great opportunity instead of losing over and over on bad trades.

There is only one winner when you overtrade.  That is the brokerage and exchange that you are paying your commissions to.  Be a winner for yourself.  Whether you are a spinner or a fast bowler, swing or day trader do it the right way.