Trading for Long term
Never invest more than 10% in a single stock
Defensive stocks aggressive stocks
Website
Trading view
Investing.com
Screener.in
Face value – value when company starts
Market value- value in market
Market capitalization = number of outstanding shares/ market value of shares
Stock symbol- BEL, SBI etc
Sector- IT, Auto, Pharma etc
Market segments
Capital market (company stocks)
Equity derivative market (derivatives)
Wholesale debt market( Government bonds, securities etc)
IPO – initial public offering
Primary market
Secondary Offering
Portfolio- stocks collection personal
Blue chip- high market capitalization
Trend Bull, Bear and sideways
Position – enter the trade
Short sell – sell and buy
Long position- buy
Square off – sell procedure
Volatility- up and down rates immediate effect
Liquidity – easiness of share
Averaging- buying different values
Volume- sum of buyers and sellers from given time
OHLC- open hight Low close
BSE Bombay SE &NSE National SE
Index- indicator
Pre select companies calculations
Nifty 50 – NSE top 50 companies
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Nifty Pharma, IT, Auto, Metal etc are the sectors
SENSEX – BSE top 30 companies
Trading
Long term investing
Short term
Swing trading
@Fundamental analysis MBV( management , Business and valuation): for long term
Qualitative and quantitative factors
Intrinsic value
Core and satellite 60% and 40% or long term and short term
Quantitative analysis (Annual report)
Profitability and growth
Margin
Earnings2
Expenses
Debts
Asset
Liability
Cashflow
Financial ratio
Financial statement
1 profit and loss statement
2 Balance sheet
3 Cashflow
Qualitative analysis (Annual report)
Business model ( activities)
Management background
Ethics
Corporate governance
MOAT
Related party transactions
Brand value
Website media(Money control, google finance)
@Technical analysis : for short term
Price movements
ANNUAL REPORT
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Balance sheet
Financial position at a given time
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Financial ratios NPM- net profit margin (PAT margin)
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25
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PIOTROSKI SCORE
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Depends on
1- Profitability (4 studies)
2- Leverage and liquidity (3 studies)
3- Operational efficiency (2 studies)
Profitability (Studies)
1-Current year Profit > Last year
2-Current year operating cash flow must be positive and high than last year
3-current year return on assets(ROA) should be positive and higher compared last year
4-Cashflow from operations must be greater than net income
Leverage and liquidity
o lower ratio of long term debt to total assets in the current year compared to last year
o higher current ratio this year compared to last year.
o dilution of equity - no new shares have been issued in the current year.
Operational efficiency
o higher gross margin compared to previous year.
o higher asset turnover ratio compared to previous year.
0-3. Bad performance
3-6 average
7-9 Good
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Profit Booking
24% rule
If 24% correct the market then do fundamental analysis and buy again 50%
Do the same if again 24% down
# Depends on positive news a high will come on the market and market will be corrected
# FII FBI buy or sell stocks it depends the market value book the profit and rebalance it
# Target based profit booking
Strong or support area book your profit and rebalance portfolio
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Find the support and buy market and find the resistance and sell the stocks
# Target based profit booking
Large cap- top 100 company NSE
Mid cap- 100 to 250
Small cap above 250
Penny stocks its stock value below 10
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Selection of stocks
Selection Stocks
1-At least 3 annual report
Promoter integrity ( Family dominated or not)
Auditor disclaimer
Management discussions & analysis
Bord of directors
CFO + CFI
Revenue grouth YoY
Operating margin YoY
always keep stoploss(25%)
2-should be Dominant sector
3- Check the sector growth last years
4- DII, FII buy for the quarter
Market Cap- 15k
Free cash flow- positive
Sales growth, Profit growth, ROE> 15%(3-5 yr min)
Current operating profit> 5 yrs avg opm
Current ROCE> 5 yrs avg ROCE
Current ROE> 5 yrs avg ROE
Debt to equity ratio < 1
Piotroski score 789
Buy when the graph near or below 200DMA
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Dividend better 2 to 5% if more there is a chance to decrease growth
Less PE ratio
ROE only equity best >20%
ROCE >20%
ROCE > ROE very less debt
ROCE < ROE more debt
Subsidiary- share holdings more than 50%
Associates- 50% or below only share holding company
Regulatory commission
RBI – Banks
IRDA – Insurance
SEBI – Stock Market
AMFI – Mutual Funds
Quarter results
April- June
July- Sep
Oct- Dec
Jan- March
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QoQ- Quarter results present and previous
YoY- Quarter results presents and last year quarter
TAXATION
Intraday- 10% and P/L can be carried out for 4 assessment years
Futures and options- 30% and can be carried out for 8 assessment years with all
speculative business includes exemptions in salary
Tax harvesting- long term gain we have exemptions 100000 book profit then
sell it and buy the same time so we can again exempt the tax for next year
Lock in period for stocks- can’t sell the stocks the period
Bonus sharing- split the shares with 1:2,1:3 etc
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