Indian Tyre Stock — Ready for 50% upside within months

Markets are doing great and everyday we are hearing “top” made stories ,, which I again say is a distant dream . But this post is not related to the broader markets but the Tyre sector . And to be noted here market runs on two factors :- fundamentals and perception of those fundamentals (sometimes euphoria and sometimes panic ). And for shorter terms prices are influenced by the perception .

That perception for Tyres Industries is going to be very very positive . The factors : rubber prices have topped , crude is not running away– this on the cost side. On the demand side I am seeing auto industry doing great and in coming days   will be doing greater .

Without elaborating so much I have told in nutshell why should the Tyres shine bright . Now combining the Fundamentals with the perception of fundamentals and with my experience on what to expect because of that I strongly see 50% plus upside in Tyre stocks by Nov-Dec when traditionally auto sales start decelerating.

To be specific MRF(cmp 33800)–it’s my favorite  , CEAT(cmp  864) and JKTyre (cmp 89) is must have for the coming months and expected levels should be MRF: 44000-55000 ,, CEAT 1260-1400,, JKTyre 140-160 before Nov-Dec 2016(lol I am mentioning year for there to be no confusion).

And I must mention here like Maruti post  which was posted in Sep 2014 these targets are for traders for Investors CEAT and JKTyre can be the kind of stocks one dreams to have in portfolio with 5-10x kind of returns in coming years as any fool can be negative on Auto sector of India which is growing at fastest pace (currently at no 5 in the world which I expect to come to no 3 very soon).


Brexit and its impact on Indian & International Market – I expect Britain to vote for Brexit -TRADE SETUP

Tomorrow British public will vote for/against Brexit. But I strongly feel it will vote in favour of Brexit. What is going to be impact on “economies” of the world or for that matter to India is a subject of big buzz these days . But in nutshell my opinion is  it’s going to make difference to Britain most(my opinion is negatively) and for the rest of the world its going to be non-event, apart for a few jitters in world market.

Markets going exactly as per my last blog post ( ) since the feb end lows of the market. And these are the opportunities(if it happens) for fresh/re-entries.

To be short and precise I expect a decent dip (not a crash) immediately after the outcome of the referendum . And I would love to see that to have a quick gains in the bigger cycle mentioned in my last blog post(link above) . Index wise following should be the strategy and I expect it to happen:


In the panic (if what I have judged about the outcome of referendum is right) NIFTY should test 7950-7880 (today’s closing is 8270) kind of levels and buying around those levels can immediately give retracement to 8200 and further up to 8600 in very short term. So if get that chance that will be a boon to those “left outs” to have a good entry point.


Bank NIFTY can be a mint tool in the above said scenario and can test sub 17000 levels(today’s closing 17892) and 17000-17100 can be a good entry point for immediate retracement to 17800 and further up to 18400-19200-19800-20400 in very short term.

Dow Jones

Dow jones being more mature can see 17400(today’s close 18011) and will be good to buy in 17400-17500 levels for immediate retrenchment to   18000 and further rise to 18600-19400 in very short term

Though I am lazy to post a lot will try to keep posting on twitter (@valuecm) and as always persons in contact will keep getting stock specific ideas with real-time trade positions and index updates .

Finally this will be a good time to make a killing in options.

My market outlook , buy any shit you will make money,may be more may be less

We have a saying that markets are ahead of fundamentals. Some people see it as markets know what’s ahead and take shape according to that. But in fact markets shape the fundamentals(and off course technicals –I don’t know how its technical as charts are drawings and drawing is an art and art is mostly creative imagination-irony )  in modern economy. AS A MOST IMPORTANT POINT I MUST REMIND – THIS WHOLE ECONOMIC SYSTEM IS A “MITHYA(HINDI)”- most of people don’t know this and those who know also deliberately disagree to it. And markets (mostly stock market) decides the fate of this whole world myth economy, it affects all even those who are neither investor nor a trader of this market. But I am not going to discuss how it is , but will discuss how to be with it and how to make money(absolutely money is a myth but let’s make max of it).
A small Example : XYZ company is in very bad position right now due to heavy debt and is under huge pressure as its not able to get further debts and due to market condition profits are minuscule compared to what they were when they borrowed. Suddenly “markets” get excited due to a “trigger” ; share prices of companies rise some big some small together with this xyz. Now this XYZ will have option to borrow more and since system has more money due to “market conditions” its profit will also rise . Soon they will be able to get money from public offers instead of debt. Old debts repaid . And this growth cycle will continue till the next doom. And by the next doom this XYZ will be much bigger than the earlier doom. And this cycle will continue forever ,maybe XYZ will be bust and replaced by ABC but the whole financial system will always be expanding as our galaxy till the final doomsday.

Now we come to our markets NSE and BSE ,as neither I will discuss those things in details as it will fill books nor you will be interested in that “shit”.  Markets has “cycles” and every major market will have its turn . For Indian markets we have begun very late and so major cycles are yet to come. If anyone have correlative analysis (you can name it Elliot wave or something like that) they can see we are at base even if you start counting all the gains Sensex has from the day it started. And Cycle wise every cycle has given more no of times retun than the previous cycle and in the beginning of those  cycles itself people see those returns so exorbitant that they can’t stay with it till the end and once they exit market goes such up they can’t re-enter waiting for that gap between their sell and cmp to become negative, 0 , or minimal ,, off course they can’t control their urge to enter again at top. I am not talking of micro-moves where p/l continues but the macro moves. The last cycle was 2002-2007 . Can’t write much because of me being typo-lazy but we are in the second cycle which has just started AND I WILL NOT BE SURPRISED IF INDEX RALLIES 80% FROM LOWS IN NOT MORE THAN 240 DAYS . What will happen to P/E and fundamentals ,, it will be “corrected” in the way of above example and what about economy –again it will correct itself upwards the same way till the time we enter an euphoric phase .

Now “will the rally last at 80% -absolutely no” it will start the rally which in the next leg will give 300-500% from there and then the final leg with 100% from there. So if I say NIFTY will be at xxx level 5 years down the line it will be a laughable target ,but it will and will be in 6 figures.

Now little micro-time frame wise and for traders : those who are feeling left out in the current run-up – no you are not left out in fact we have done nothing compared to what’s coming up – Board the bus enjoy the ride. 


How to Make loss when your Holdings are 10 times up

Daily we come across article in the likes of Economic Times Etc of savvy Investors wealth creation story. But hidden there are a lot of stories of great wealth destruction of investors who bought “really good stocks at rock bottom prices and their wealth getting destroyed when market is 1.-2x from where they entered and their stocks are at 10x-20x levels from where they bought”.

This post is based on real tales of people I have come across but names (both stock scenario and persons) are imaginary.

Just go through the tale of Mr. X and his journey from 2013-14 and how he went to negative net worth even when he picked stocks at rock bottom prices , his holdings were 10 times to 20 times from where he bought  and market just corrected one day 4% and next week he went bust.

In beginning Mr X bought Tata Elexsi at sub 200 level say for 10 lac . In less than 6 months It becomes 640+. Recent high is 2160+ ie. 11 times of original buy.

In the upcoming six months our savvy Mr X bought Nilkamal , another good stocks at another rock bottom price of around 100 .

Between 2013 second half to 2014 beginning  our investor had a good portfolio of around 20 lac investment value built:

Stocks Entry Price No of Shares Total Investment
Tata Elexsi 196 5100 ₹ 9,99,600.00
Nilkamal 100 5000 ₹ 500,000.00
SRIPIPES 21 10000 ₹ 2,10,000.00
Welspun India 70 5000 ₹ 3,50,000.00
Total ₹ 20,59,600.00


Now buy mid 2014 our Mr. X’s portfolio becomes more than 70 lac . He gets in touch with some really good advisors and starts picking up other stocks but now without putting any fresh cash but on the margin he is getting on his holding. So he buys few  stocks again at rock bottom prices worth also adding few of the stocks he already owned worth 35 lac . Now the value of his holdings is 1.05 crore. Thanks to Modi G by June 2015 his holdings value crosses 2.2 crores with an investment of little more than 20 lacs.

Now our Mr X comes in contact with a real wizkid and takes Ceat not in cash but fut and small quantity compared to the margin he is having. He makes some good gain as Ceat moved one way from 6xx to 11xx . So in the process Mr. X makes some good gain of say 10 lacs . Now came the black Monday of August. Market crashed almost 5% and his stocks crashed too (in fact his stocks were down from top already before the Black Monday). Suddenly Mr X starts seeing his portfolio from the Top and sees it down by almost 60-70 lac , he did not see its up 7-8  times from his investment.

Even After black Moday our investor is at :

Holding Value: 1.65 Cr

Minus Margin : 35 lac

Minus Interest on Margin: 11 lac

Minus Original Investment : 20.05 lac

Net Profit : More than 98 lac


Now broker of Mr X will be more than comfortable to give him margin of 1.1 Crore buying. Seeing market bounce back from 7600 to 8000  Mr X decides to take it and not only that he buys 3X of margin a very good and fundamentally strong counter Ceat @1100 to sell half in T+5 with some “trading gains” and hold the rest for being multi-bagger. Now the status is:

Holding Value : 1.65 Cr + 3.3 Cr = 4.95 Cr

Margin Used + Interest – Cash: 0.35+0.11+ 3.3 – 0.205 = 3.555 Cr

Now comes the real correction in market and market just retests it earlier lows but stocks further correct 10-30% and his portfolio goes down by 25% from the last value of 4.95 cr and so now value becomes 3.7125 Cr and off course broker won’t give margin of 3.555 on portfolio value of 3.7125 Cr so selling starts and after all sold net position becomes:

Selling Value : 3.7125 Cr ( if at all sold as soon as margin call came)

Minus Margin : 3.555 Cr (leave the additional interest , have some mercy on Mr X)

Net Cash In = 0.1575 Cr

Now all the holding sold and most tragic is apart from Ceat all stocks sold at 8-10-20 times of buying price Mr. X is having loss of 4 lac (Thank God he had bought some really good stuffs which didn’t correct 50-70% after rising 1000% otherwise he would have been in debit).

So what we learn from all this? I will write mine 1st send your inputs to .