PLETHICO - WEEKLY PICK
PLETHICO broke out of flag pattern with very impressive volumes and looks very bullish. Looks good for around 350/360 in short term and 475 in med term.
IFGL REFRACTORIES - WEEKLY PICK
Good breakout with very impressive volumes can push this stock up a great deal. Look for short term target of 43.50 and med term 57.
US Dollar Index :: Dollar carry trade game prove all technical wrong from last two month.. Is The US dollar heading towards zero..?? Dollar chart, looks like inverse chart of stock market and commodity market..
Important factor fuelling this asset bubble is the weakness of the US dollar, driven by all carry trades. The US dollar has become the major funding currency of carry trades as the Fed has keep interest rate on hold,, Investors who are shorting the US dollar to buy on a highly leveraged basis higher yielding assets and other global assets are not just borrowing at zero interest rates in dollar terms, they are borrowing at very negative interest rates as low as negative 10 or 20 % annualized, as the fall in the US dollar leads to massive capital gains on short dollar positions. Traders are borrowing at negative 20 % rates to invest on a highly leveraged basis on a mass of risky global assets that are rising in price due to excess liquidity and a massive carry trade. Every investor who plays this risky game looks like a genius, even if they are just riding a huge bubble financed by a large negative cost of borrowing, as the total returns have been in the 50-70 % since March.. But one day this bubble will burst, leading to the biggest co-ordinate asset (like stocks, commodity) bust ever.. If factors lead the dollar to reverse and suddenly appreciate, the leveraged carry trade will have to be suddenly closed as investors cover their dollar shorts. And collapse of all those risky assets like equities, commodities, emerging market asset classes and credit instruments. This unraveling may not occur for a while, as easy money and excessive global liquidity can push asset prices higher for a while. But the longer and bigger the carry trades and the larger the asset bubble, the bigger will be the ensuing asset bubble crash. The Fed and other policymakers seem unaware of the monster bubble they are creating. The longer they remain blind, the harder the markets will fall,,
And chart pattern tells that carry trade game may be end sooner..
Dollar index moving down as 5 of C last leg and maximum target of this 5th leg in between 74.40 to 74.60.. Already treading near end of wave target.. May be any time Dollar start to move up from low as far as stay above 74.40 (time target 16th Nov to 18th Nov).. For conformation of 5th of C over when rally start to trade above 77.. Till then wait and watch and stay away form stock and commodity market.. If US Dollar fail to sustain above 74.40 then next strong support March low 70.70..
(Some part of post copy from Financial times 1st Nov post)
Important factor fuelling this asset bubble is the weakness of the US dollar, driven by all carry trades. The US dollar has become the major funding currency of carry trades as the Fed has keep interest rate on hold,, Investors who are shorting the US dollar to buy on a highly leveraged basis higher yielding assets and other global assets are not just borrowing at zero interest rates in dollar terms, they are borrowing at very negative interest rates as low as negative 10 or 20 % annualized, as the fall in the US dollar leads to massive capital gains on short dollar positions. Traders are borrowing at negative 20 % rates to invest on a highly leveraged basis on a mass of risky global assets that are rising in price due to excess liquidity and a massive carry trade. Every investor who plays this risky game looks like a genius, even if they are just riding a huge bubble financed by a large negative cost of borrowing, as the total returns have been in the 50-70 % since March.. But one day this bubble will burst, leading to the biggest co-ordinate asset (like stocks, commodity) bust ever.. If factors lead the dollar to reverse and suddenly appreciate, the leveraged carry trade will have to be suddenly closed as investors cover their dollar shorts. And collapse of all those risky assets like equities, commodities, emerging market asset classes and credit instruments. This unraveling may not occur for a while, as easy money and excessive global liquidity can push asset prices higher for a while. But the longer and bigger the carry trades and the larger the asset bubble, the bigger will be the ensuing asset bubble crash. The Fed and other policymakers seem unaware of the monster bubble they are creating. The longer they remain blind, the harder the markets will fall,,
And chart pattern tells that carry trade game may be end sooner..
Dollar index moving down as 5 of C last leg and maximum target of this 5th leg in between 74.40 to 74.60.. Already treading near end of wave target.. May be any time Dollar start to move up from low as far as stay above 74.40 (time target 16th Nov to 18th Nov).. For conformation of 5th of C over when rally start to trade above 77.. Till then wait and watch and stay away form stock and commodity market.. If US Dollar fail to sustain above 74.40 then next strong support March low 70.70..
(Some part of post copy from Financial times 1st Nov post)
About The CompanyXL Telecom manufactures telecom products such as Cable jointing kits, mechanical closures, fusion splicing machines, SMPS systems, Solar photo voltaic Systems, ethanol production, Kyocera Service CentersXL Telecom & Energy.
About The Financials
For current Q2, the company slipped into the red with a net loss of Rs 29.50 crore as against a net profit of Rs.14.99 crore in Q2FY09. This loss does not come as a surprise as there had been a drastic 94% drop in the topline to Rs 15.41 crore.
In September 09’, the company allotted around 1 million shares of Rs.10 each, at a premium of Rs 150 per share on conversion of FCCBs to the extent of $4.5 million. Following this dilution, it’s paid up equity share stands increased to Rs 20.77 crore.
The company is into an extremely capital intensive sector and the fact that it is stretched to its limit n debt is evident from the fact that for Q1FY10, its interest outgo at Rs.23.90 crore was much more than the net sales earned by the company. It has made a proposal to restructure credit facilities and the same has been approved by Corporate Debt Restructuring Cell (CDR Cell).
About The Stock
My personal opinion on this stock with regard to its’ price performance in short to long term on basis of Fundamental analysis , Technical analysis and exclusive multi bagger reliable news sources are exclusively reserved for the registered member with detailing of the same. Only registered member have right to email me mentioning the name and date of registration to ask for the same.
My personal opinion on this stock with regard to its’ price performance in short to long term on basis of Fundamental analysis , Technical analysis and exclusive multi bagger reliable news sources are exclusively reserved for the registered member with detailing of the same. Only registered member have right to email me mentioning the name and date of registration to ask for the same.
Nifty Daily Charts shows the trendline got broke in the 12 day fall we have seen but it again got up the trendline within 3 weeks so it can not be considered as violation in trendline and on going correction in the bull market.
Now whats next we are facing resistance at 5030 levels continuously in past 3 trading sessions.So that comes out to be resistance and can be considered stop loss for the shorts.
Momentum is fading in past couple of trading sessions. Now longs should protect there profits with a stop loss around 4940 levels.As nifty has closed above all its averages so it would be advisable not to short nifty now.Wait for some sign of weakness than short.
Levels which needs to be watched out
Weekly Pivot:4936
Weekly Support:4939 4875 4853 4708
Weekly Resistance:5030 5081 5164
Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
-
- we are only interested in a long position.
- The momentum is upward.
- The upward momentum is slowing.
- This is an area to be cautious about placing a long entry, and if you are already long it might be time to tighten your stop.
SAIL has gained strong upward momentum which will continue till the stock is closing above 173. One can buy with target of 188 > 210 > 220 and a stoploss on a closing basis at 173.
I would like to go back to the month of January in 2008. Am certain that most of you are still finding it difficult to digest the happenings that started from that month. There is one other thing that you would remember - Reliance Power IPO. This IPO oversubscribed by around 69 times and locked in money worth 180 billion USD, almost the combined market value of the then Portuguese and Czech stock markets. By then, i was really wondering why anybody would really want to subscribe to their IPO, as there were absolutely no operations and all plans were attractively laid out only on paper. The stock which went to make 500 levels is currently quoting at around 140.The story of Future capital is also very similar to Reliance Power. But, somehow this stock has slipped away from the bad image that Reliance power IPO went on to get. This stock which went on with its IPO and got listed by the same time as Reliance, went on to make 1200 levels just after listing and now it is currently trading at around 240. Again, there is this other similarity, everything looked great on paper and the company has not delivered anywhere close to what the expectations were.
With due respects to the team, the management team contains Sameer Sain, ex - Managing Director at Goldman Sachs, Dhanpal A. Javeri, ex - Executive Director at KPMG, N. Shridhar, ex - CFO of Britannia industries, Roopa Purushothaman, ex - VP at Goldman Sachs, Anil Kaul, ex - CEO of ICICI direct, Rakesh Makkar, ex - CFO of Citifinancial India, Shishir Baijal, ex- CEO of Inox Leisure and many other eminent personalities from the corporate world. The management team that Biyani managed to assemble is simply breathtaking but at the end of the day, the company has not delivered until now.
Leaving out the highs that the company made after listing, the company was valued at around 5000 crore during the IPO. And you know what? they actually had only plans, some warehousing space which was predominantly used by Pantaloon Retail and above all to draw ppl, the above management team and of course absolutely no operations as such. These kind of hype creation and pooling of investors money at ease can be done only by Biyani, and next only to Reliance.
Fine lets leave out the past and see what the future holds. There are currently three predominant business verticals - Investment advisory, Retail financial services and Wholesale credit. In the investment advisory division, the company provides investment advises to Private equity investments. Currently, they are advisors to funds worth 1.5 billion USD and most of these funds are aligned towards either Retail or Real estate. In these two space, there can be no better person from whom you can take an advise other than Biyani.
Advisory business - I had a look at their portfolio and it was quite interesting and impressive. The funds to which the company advises, has taken stakes in VLCC, Liliput Kidswear, Sula wines, Centrum Capital, Tops Security, ReGen Power tech, Pan India food solutions and many other private companies. Had i been a PE manager, i would have invested in most of the companies from their portfolio and there is a strong chance that most of these companies would provide huge returns in the time to come, given that the portfolio was assembled in early 2007 and in 2006. Future capital, apart from the advisory fees will manage to take away 20% of the profits, which i believe would be huge one time gains as and when the stakes are sold. Also, with the Private Equity space trying to make a comeback, the Assets Under Management can grow at a healthy rate over the years to come, thereby improving the advisory fees and the net income. So, the advisory business as a vertical looks to be a convincing bet for the years to come.
Retail Financial Services - This vertical predominantly looks at providing retail credit in the form of Personal loans, Consumption loans, Home Equity loans and credit cards under the name Future card. This vertical will strongly look at leveraging the exclusive agreement that Future Capital has with Pantaloon Retail to be the sole provider of these products and services in all of the stores under Pantaloon Retail. You know what? This vertical will mostly look at convincing a customer in a Pantaloon Store to buy a Television or a Refrigerator and to buy that on a loan provided by Future Capital. The basic mantra is to convert all Pantaloon retail customer into a Future capital customer by buying any of their loans or other products.
This vertical also looks at selling third party products such as a Life insurance product or a Mutual fund product to the Pantaloon retail customer, thereby taking away the commission. I have heard stories as to how the stores of Pantaloon retail attracts some number of millions of footfalls and how that is bound to increase. If the footfall story is good, then this vertical should also be doing good in the future.
Wholesale Credit - This vertical will look at providing credit to unaddressed markets of mezzanine, promoter, project and acquisition financing and other special situations related financing. Given the kind of business activities that are currently happening in these spaces, there is a strong possibility at this vertical also will do good.
The article is becoming long enough that we should be stopping soon. It is very evident that Future Capital as a company has not performed anywhere close to the expectations that were pinned on it. But that does not mean that this status will continue. The company which was once available at a value of around 8000 crore is now available for 1500 crore. The company is all about people and how these people perform and it is one of the best plays on India's much hyped consumption story. There is a very high probability that the company will start delivering in the time to come.
The US Dollar Index (USDX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies. It is a measure of the value of the U.S. dollar relative to majority of its most significant trading partners. This index is similar to other trade-weighted indexes, which also use the exchange rates from the same major currencies.
It is a weighted geometric mean of the dollar's value compared only with
Euro (EUR), 57.6% weight
Japanese yen (JPY), 13.6% weight
Pound sterling (GBP), 11.9% weight
Canadian dollar (CAD), 9.1% weight
Swedish krona (SEK), 4.2% weight and
Swiss franc (CHF) 3.6% weight.
USDX started in March 1973, soon after the dismantling of the Bretton Woods system. At its start, the value of the US Dollar Index was 100.000. This means that a value of 120 would suggest that the U.S. dollar experienced a 20% increase in value over the time period. It has since traded as high as the mid-160s and as low as 70.698 on March 16, 2008, the lowest since its inception in 1973.
How Is It Co-related With Commodities?
Here is a graph to show how Dollar Index may co-relate many times, a strong dollar has indicated weak commodities and a weak dollar has given way to strong commodities historically. Just see the crude-dollar index comparison below
What Does Currency Carry Trade Mean?
A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. A trader using this strategy attempts to capture the difference between the rates, which can often be substantial, depending on the amount of leverage used.
More Explanation On Currency Carry Trade
It’s simple to understand, and it’s not just hedge funds and international bankers who engage in the trade. Many brokerage firms offer margin loans at near 1% in Japanese yen, which are re-invested by their clients to buy stocks around the world.
The “yen carry” trade is primarily a simple game of interest rate arbitrage.
Step 1: Borrow yen at 0.5% and convert the yen into $9,000 US dollars.
Step 2: With $9,000 from Japan and $1,000 of your own money, invest $10,000 in US Treasury notes at 5.00%.
Step 3: Collect $500 in interest from the US Treasury, and pay $45 to the Japanese lender.
Step 4: Pocket the $455 difference as a profit, for a rate of return of 45.5% on your original $1,000. Step 5: Sell the US Treasury note, and convert the US dollars back into Japanese yen to pay off your loan.
Step 5 is the tricky part, because if the yen were to suddenly surge by 5% against the US dollar, the principal amount of the yen loan would also climb 5% from $9,000 to $9,450, which would wipe out the $455 profit from the interest rate spread.
Carry traders must take on currency risk to play the game, which can go very wrong, if the yen suddenly shoots higher. And that’s what happened in the past when many crises occured and world markets went into a tailspin.
The big risk in a carry trade is the uncertainty of exchange rates. Using the example above, if the U.S. dollar were to fall in value relative to the Japanese yen, then the trader would run the risk of losing money. Also, these transactions are generally done with a lot of leverage, so a small movement in exchange rates can result in huge losses unless the position is hedged appropriately.
How has it impacted in the past?
Yen Carry Trade Unwinding the Dow Jones
Carry Trade impacted Brazil Bovespa same way
Roubini Says Carry Trades Fueling ‘Huge’ Asset Bubble
Investors worldwide are borrowing dollars to buy assets including equities and commodities, fueling “huge” bubbles that may spark another financial crisis, said New York University professor Nouriel Roubini.
“We have the mother of all carry trades,” Roubini, who predicted the banking crisis that spurred more than $1.6 trillion of asset writedowns and credit losses at financial companies worldwide since 2007, said via satellite to a conference in Cape Town, South Africa. “Everybody’s playing the same game and this game is becoming dangerous.”
Who Is Nouriel Roubini?
Nouriel Roubini (born 29 March 1959) is a professor of economics at the Stern School of Business, New York University and chairman of RGE Monitor, an economic consultancy firm.
In 2008, Fortune magazine wrote that: "In 2005 Roubini said home prices were riding a speculative wave that would soon sink the economy. Back then the professor was called a Cassandra. Now he's a sage." In September 2006, he warned to a skeptical IMF that: "The United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence, and, ultimately, a deep recession." He also foresaw "homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt". The New York Times labeled him "Dr. Doom", whereas, in hindsight, IMF economist Prakash Loungani has called him "a prophet".
Roubini among 8 who saw the crisis coming - http://money.cnn.com/galleries/2008/fortune/0808/gallery.whosawitcoming.fortune/2.html
It is a weighted geometric mean of the dollar's value compared only with
Japanese yen (JPY), 13.6% weight
Pound sterling (GBP), 11.9% weight
Canadian dollar (CAD), 9.1% weight
Swedish krona (SEK), 4.2% weight and
Swiss franc (CHF) 3.6% weight.
USDX started in March 1973, soon after the dismantling of the Bretton Woods system. At its start, the value of the US Dollar Index was 100.000. This means that a value of 120 would suggest that the U.S. dollar experienced a 20% increase in value over the time period. It has since traded as high as the mid-160s and as low as 70.698 on March 16, 2008, the lowest since its inception in 1973.
How Is It Co-related With Commodities?
Here is a graph to show how Dollar Index may co-relate many times, a strong dollar has indicated weak commodities and a weak dollar has given way to strong commodities historically. Just see the crude-dollar index comparison below
What Does Currency Carry Trade Mean?
A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. A trader using this strategy attempts to capture the difference between the rates, which can often be substantial, depending on the amount of leverage used.
More Explanation On Currency Carry Trade
It’s simple to understand, and it’s not just hedge funds and international bankers who engage in the trade. Many brokerage firms offer margin loans at near 1% in Japanese yen, which are re-invested by their clients to buy stocks around the world.
The “yen carry” trade is primarily a simple game of interest rate arbitrage.
Step 1: Borrow yen at 0.5% and convert the yen into $9,000 US dollars.
Step 2: With $9,000 from Japan and $1,000 of your own money, invest $10,000 in US Treasury notes at 5.00%.
Step 3: Collect $500 in interest from the US Treasury, and pay $45 to the Japanese lender.
Step 4: Pocket the $455 difference as a profit, for a rate of return of 45.5% on your original $1,000. Step 5: Sell the US Treasury note, and convert the US dollars back into Japanese yen to pay off your loan.
Step 5 is the tricky part, because if the yen were to suddenly surge by 5% against the US dollar, the principal amount of the yen loan would also climb 5% from $9,000 to $9,450, which would wipe out the $455 profit from the interest rate spread.
Carry traders must take on currency risk to play the game, which can go very wrong, if the yen suddenly shoots higher. And that’s what happened in the past when many crises occured and world markets went into a tailspin.
The big risk in a carry trade is the uncertainty of exchange rates. Using the example above, if the U.S. dollar were to fall in value relative to the Japanese yen, then the trader would run the risk of losing money. Also, these transactions are generally done with a lot of leverage, so a small movement in exchange rates can result in huge losses unless the position is hedged appropriately.
How has it impacted in the past?
Yen Carry Trade Unwinding the Dow Jones
Carry Trade impacted Brazil Bovespa same way
Roubini Says Carry Trades Fueling ‘Huge’ Asset Bubble
Investors worldwide are borrowing dollars to buy assets including equities and commodities, fueling “huge” bubbles that may spark another financial crisis, said New York University professor Nouriel Roubini.
“We have the mother of all carry trades,” Roubini, who predicted the banking crisis that spurred more than $1.6 trillion of asset writedowns and credit losses at financial companies worldwide since 2007, said via satellite to a conference in Cape Town, South Africa. “Everybody’s playing the same game and this game is becoming dangerous.”
Who Is Nouriel Roubini?
In 2008, Fortune magazine wrote that: "In 2005 Roubini said home prices were riding a speculative wave that would soon sink the economy. Back then the professor was called a Cassandra. Now he's a sage." In September 2006, he warned to a skeptical IMF that: "The United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence, and, ultimately, a deep recession." He also foresaw "homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt". The New York Times labeled him "Dr. Doom", whereas, in hindsight, IMF economist Prakash Loungani has called him "a prophet".
Roubini among 8 who saw the crisis coming - http://money.cnn.com/galleries/2008/fortune/0808/gallery.whosawitcoming.fortune/2.html
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