PATHFINDER OF INDIAN $HARE MARKET$ N$E&B$E: Best Delivery Buy ...!!! April 15th 2008....RPL(532743) (cmp Rs 181.95)

Sunday, April 13, 2008

Best Delivery Buy ...!!! April 15th 2008....RPL(532743) (cmp Rs 181.95)

(Click the chart to enlarge)
Notable Observes

RPL, Reliance Petroleum Limited is a company floated by Reliance Industries (RIL) to set up a greenfield petroleum refinery and polypropylene plant in a Special Economic Zone in Jamnagar.The new plants would be close to the existing refinery of RIL.
Refinery will have the process capacity of 580,000 barrels per day of crude and the polypropylene plant will have the production capacity of 900,000 tonnes per annum.
The Nelson complexity index (It is a measure of the secondary conversion capacity of a petroleum refinery relative to the primary distillation capacity) for the refinery is higher at 14 against 10.3 for the existing refinery.As a result the refinery would be able to process heavier crude and produce high value added products.Post this expansion, RIL on a consilated basis will become the largest refinery in the world.
Most of the products from the refinery will cater to the international markets. The company aims to supply most of the diesel produced to Europe and gasoline to US.
Reliance Petroleum Ltd has announced that the Company has successfully completed the second year of implementation of its complex refinery, coming up in a Special Economic Zone at Jamnagar.
The Company has achieved 82% overall progress in just 24 months since commencement of the Project. Based on the progress so far, the Company is on course to complete the project ahead of its initial schedule of December 2008.
During the quarter, project implementation gained further momentum and led to achievement of several significant milestones Commenting on the project progress Mr. Mukesh Ambani, Chairman of the Company said "I am pleased with the rapid pace of RPL project implementation and the team is now fully geared to sustain the construction on fast track even in the coming quarters. We are well on the way to create history by successfully completing the refinery ahead of its initial schedule. RPL is poised to benefit from emerging opportunities in the sector and create superior value for its shareholders".
At the industry level, global refining fundamentals remain intact and promise exciting value creation opportunities for large and complex refiners.
Despite high and volatile crude prices, the global demand trends have been positive and are expected to remain firm on the back of robust outlook for transportation fuels. With stringent product specifications adding pressure on an already stretched refining system and continuing delays in new capacities, refining margins are expected to stay robust. Complex refiners will gain further from wide light-heavy differentials. In this context, the RPL project that is designed around large scale, higher complexity, lower capital costs and faster schedule, would have a significant competitive advantage in the markets.

Share holding pattern

Promoters : 75.38%
Public : 24.62%

Technical Overview

Rpl on daily chart has been is side sideways after the major fall on 22nd Jan. Since then he stock has been trading in channel of price range 140-183. On daily chart the stock has witnessed Channel Breakout and Flag Breakout with huge volumes ( as indiacted in the above chart). These breakout confirms the further uptrend for the stock.The stock is recommend to buy at the Cmp 181.95.

Support

Support 1 : 171
Support 2 : 160

Stop Loss : 154 on closing basis

Targets

Target 1 : 202
Target 2 : 215
Target 3 : 227
Target 4 : 260

Period
5 to 6 months.

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Golden Rules...!!! PLEASE READ WITH PATIENCE

Dear Friends...!!! You will find many investors entering the market at high levels and making a quick exit as the market witnesses a correction. Unfortunately, such investors seldom think of investing in stocks again. Thus, they ignore an excellent opportunity to earn above average returns.

In short, investing in equities can be a difficult proposition for retail investors. However, equity must form a part of every investor’s portfolio. The proportion could vary, depending on the investor’s age, monetary requirements, risk appetite, etc.

To cope with volatility, it is important to have a disciplined and systematic approach to equity investment. Set your own rules and more importantly, follow them religiously. Indeed, the mantra for successful equity investment is a well thought-out, disciplined investment strategy.

A long term monetary commitment, adherence to discipline in investment and decisions based on company fundamentals are essential ingredients for successful equity investment.

Here are golden rules for safe equity investment, which could help you to sail through different market scenarios.

1. Be a long term investor This is the first and most important rule of equity investment. Timing the market - entering the market at low levels and exiting at higher levels - is almost impossible. Though often heard on the street, this strategy is difficult to implement, as it is nearly impossible to gauge when the market has peaked and when it has bottomed out. Do not play the guessing game; it is more sensible to put money into the market with a long term commitment. Trading or speculating seldom helps in equities. You could make quick bucks by trading in 10 deals, but you could lose whatever you have earned in just one deal. This is the risk you take when you try to trade and make easy money from the stock market. Apart from incurring financial losses, it also involves a lot of mental stress. Trading could give you sleepless nights. Globally, economies follow seven year business cycles of boom and bust. Thus, when you are investing, invest for a fairly long term, say three to seven years. Indeed, it is a proven fact that over the long haul, equities tend to outperform all other asset classes.

2. Invest time and efforts in doing your homework Investing in equities is not a one time affair. You need to invest a lot of time and efforts, apart from money, to understand industries, economic trends and so on. Further, you should dedicate time to analyse companies, as this will help you to avoid costly mistakes. You need to develop the habit of reading first hand information - such as company annual reports, company announcements and so on. Annual reports of large companies are easily available on the web. Reading business dailies is also a must for equity investors. Get your basic concepts and fundamentals right. Revisiting financial fundamentals periodically would be a good idea. You need to understand basic concepts like the Price-Earning ratio (P/E ratio), operating margins, earnings per share, etc. Analysing balance sheets and profit and loss accounts is a must. A short term course on ratio analysis would be of immense help. Further, understand technicalities of investment, like how the stock market operates, how to buy or sell, settlement procedures, etc. Also focus on domestic economic and policy development. These factors are also of immense importance as they lead to structural changes in the economy that would benefit certain industries. For instance, the boom in the telecom sector in the domestic market is driven by government policy initiatives over the years. Lastly, you also need to keep yourself abreast with key global developments. With liberalisation and subsequent integration of economies, global factors also impact domestic industries and the stock market. The stock market is said to be all about sentiments. However, in this mad rush you need to stay focused and maintain a lot of discipline in executing your investment strategy. Thus, irrespective of which way the market moves, you need to stick to your investment strategy without getting swayed by market sentiments. In short, discipline in your investment approach will protect you from the herd mentality. Most investors are tempted to buy when everyone is on a buying binge and sell when the market is moving southwards. But if you have decided as a rule to buy a particular stock only when the overall market corrects by one per cent, this rule could kill your temptation to jump on the stock when the market is overheated.

3. Pay the right price It is essential to buy at the ‘right price’, that is, the price that you are comfortable paying. Do not buy because others are doing so. This will help you to hold the stock for a longer duration. Conversely, when you have to decide when to sell, if you feel that the market is overheated and prices have reached unrealistic levels, exit; Don’t stick on hoping for a little more. It helps to limit your own greed.

4. Portfolio diversification Diversion is a very old and popular investment strategy, applied to reduce portfolio risk. Actually, before you start investing in equities, you should consider various factors like your age, monetary requirements, etc, to determine how much risk you can take on. For instance, if you are around 30 years old, you can invest a greater portion of your portfolio in equities than a retired person. Once you have determined how much risk you can take on and how much you can invest regularly in equities, try to achieve diversification in your portfolio. To reduce risk, diversify within equities by investing across sectors. Do not invest in one or two sectors or any negative development pertaining to those sectors could severely impact the profitability of your portfolio. Secondly, ensure a good blend of small, mid and large-cap stocks in your portfolio. While large cap stocks would lend stability to your portfolio, small and mid cap stocks would give you an above average appreciation. Basically, growth potentials are higher in the case of small and mid cap stocks. Thus, just having large cap stocks could be safe but also mean that returns are just about at the same level as market returns. Thirdly, invest across value and growth stocks. Growth stocks are risky but also offer higher returns while value stocks are likely to be less volatile. In brief, when you spread your investments over a larger number of stocks and sectors, if a few stocks/sectors under-perform, this is compensated by other stocks/sectors which perform well.

5. Do not buy on tips or rumors rather focus on fundamentals Tips and rumors are an integral part of the stock market. Always remember that these could be engineered by a group of traders or punters. Therefore, a sharp rally based on rumors could fizzle out in a short time. You should strictly stay away from rumors, suggestions or tips received from your broker or friends or the investor circle. Investments based on tips could lead to huge losses. Rather, you would be better off investing based on industry and company fundamentals. Furthermore, generally such tips pertain to small and mid cap stocks, where liquidity is extremely limited. If you invest in such stocks, you could get trapped in an illiquid investment for a very long time.

6. Buy shares of companies whose business you understand In the long run, the stock market rewards companies with strong fundamentals and good financial performance. Therefore, it is essential for you to invest in companies whose industry dynamics and business models you understand. This will help you to gauge whether a transformation in an industry is positive or negative, at an early stage itself, and its likely impact on the company’s fundamentals. Your understanding of industry dynamics would help you to evaluate industry trends.

7. Don’t sell in panic Markets go through cycles of boom and bust and volatility is a way of life in equities. Do not sell your holdings in a hurry and panic just because your stocks have witnessed a sudden correction. Always focus on company fundamentals; if they are intact, there’s nothing to worry about.

8. Do not borrow money to invest in equities It is true that equities tend to outperform other investment avenues in the long run. However, there is no guarantee that you will make money on your stocks either in terms of dividends or capital gains, if your sale of shares is time-bound. Therefore, if you borrow funds to invest in equities, it might be difficult for you to repay the interest or principal on the loan, on time. What really matters in equity investment is your withholding power. So, invest your surplus money in equities and only invest an amount that you will not need in the immediate future. If you borrow and invest, your withholding power to stay invested for the long term could be limited.

9. Do not marry a stock If you feel your investment decision has gone wrong, exit the counter; don’t try to average. It is prudent to cut losses, rather than lower the average purchase price. Particularly in cases where the stock is witnessing a continuous sell-off, it is better to offload your position and book losses. You can use the same money to invest in other opportunities.

10. Invest regularly and gradually build up your position Just as you put money into fixed interest bearing investments regularly, also invest in equities on a periodic basis. Further, do not invest at one go. Rather, buy on a regular basis and in small lots. This will help you to buy stocks at a reasonable price. 11. Monitor your portfolio Investing in equity is not a one time affair. Buying shares is perhaps the smallest part of the overall investment activity. It is important to periodically monitor and review your investment portfolio. It is always prudent to sell a stock if you feel that the fundamentals have deteriorated and the stock is overpriced in comparison to its fair value. Money has an opportunity cost and by selling an overvalued stock you can investment the same money elsewhere, for better capital appreciation opportunities.

PATHFINDER OF INDIAN $HARE MARKET$ N$E&B$E

Sunday, April 13, 2008

Best Delivery Buy ...!!! April 15th 2008....RPL(532743) (cmp Rs 181.95)

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