Sunday, 30 October 2016

What are few tips for trading in Indian stock market? What are the trading secrets?

 
The takeaway is this…
If you enter off the daily time frame, you set your stop loss and manage your trade on the daily time frame.
If you enter off the 1-hour time frame, you set your stop loss and manage your trade on the 1-hour time frame.
If you enter off the 15 minutes time frame, you set your stop loss and manage your trade on the 15 minutes time frame.
Get it?
2. Place your stop loss at a level where your trading setup is invalidated
Don’t set your stop loss based on a dollar amount you’re willing to lose.
Instead…
Set it based on the structure of the markets, where if your stop loss is triggered, you know you’re wrong.
For example, if you’re long at support, then a break of support would mean you’re wrong…
Or if you’re trading a breakout, then a close back into the range would mean you’re wrong…
3. Trading with the trend increases the probability of your trades
When the market is trending, it has an ebb and flow with two different “legs” in it.
Impulse move – Longer “leg” that trades in the direction of the trend
Corrective move – Shorter “leg” that trades against the direction of the trend
By trading with the trend, you’ll get a bigger bang for your buck as the impulse move is stronger than the corrective move. This gives you greater profitability for the same amount of risk.
Here’s what I mean:
 
Nowadays most of serious traders have facility to access advanced to technical chart as well as many automated trading system. Most of traders can’t understand that almost all trading systems have some cycles. Some systems will work in some market conditions for eg most of trend following systems will give tremendous profit in trending market.( either bullish or bearish) some Strategies like "covered call" will work on mild bull markets.

Since most of traders seeking Secret even though they already know many good system, this makes good business opportunities for Investment Gurus, Strategy sellers and trading system developers.
First of all ,no one will be revealing you the trading secrets at any point  over here!
Although people spend too much time in identifying  their stratgey,  they fail to understand the importance of Trading psychology and discipline .The below picture depicts it.

For example 2014 was very good bull year in Indian market. Many small cap and mid cap stocks rose multiple times during this year. So Many investors started to believe fundamentals than technical. So to fill this Gap many Investment Guru who sells their investment ideas or their investment methods to public are appearing on media like TV, Social media and online forums to teach Value investing .

Suppose the learning period of Value investing for normal investor is two year and he starts to learn value investing on beginning of 2015. he could able to pick right stocks by his own knowledge only at end of 2017. At that time he might not able to pick stock at right valuation. Chances there to buy some stocks by chasing market. In short……. it is better to adapt value investing at the early stage of bull market or late stage of bear market than late stage of bull market or early stage bear market. So it is vital to know when bull market ends or bear market starts.

The above scenario also applicable for trading system. most of trading system which uses leverage has smaller cycles than investment cycle. Most of Strategy sellers would start to claim as they have secret system that would give profit for life time. Most them may have given good profits in recent times but no one knows when it starts to give losses (whips or drawdown). Even some strategy sellers keep on teaching many new strategies time to time (to keep their regular customers ) . From traders point of view it is very tougher to find when that cycle (Or Trend ) end comparing to “when bull market ends”. I have seen many traders who had spent more money than their trading capital to learn trading/investing Strategies  and failing to meet out their expectations.

I have seen very less people (may be less than 5% ) who are doing well in both trading as well as teaching .So one has more probable to find a coach or a mentor who do not having good trade records than good one.

Most of people seeks the Secret outside and failed realize that the Secret is in inner side them.

I have tested many trading systems that looks very foolish that are not giving consistent loss. This suggests even fools can’t loss money if he follows a regular Strategy with right money management.

So if one traders follows any of proven rules like

• CUT YOUR LOSSES LET YOUR PROFIT RUN
• YOUR BIGGEST LOSER CAN’T EXCEED YOUR BIGGEST WINNER
• THE FIRST LOSS IS THE BEST LOSS
• DEVELOP A METHODOLOGY AND STICK WITH IT. DON’T CHANGE METHODOLOGIES FROM DAY TO DAY.
• CONSISTENCY BUILDS CONFIDENCE
• THE MARKET PAYS YOU TO BE DISCIPLINED
• DON’T RISK MORE THAN 2% OF YOUR CAPITAL IN A SINGLE TRADE

he/she will have definite edge than average traders.

One may have seen these kind of rules every where. But one should note that one may not create wealth over the night by using above rules. But I can assure that one can’t loose money at least if he is disciplined. Over the period this disciplined approach builds wealth slowly but steadily
 
Below are some tips for trading in Indian stock market:
Application Type
There are two types of application of online trading in a market, for which we can practice online trading skills and techniques. There is a way of performing stock market without much involve of real money, in this case there is no financial risk. The two types of stock market duplicate are the financial and the other one is the stock game of fantasy simulator. It is always the best thing to go for the guidance of good stock market consultant.
Market situations
So, the online trading systems are also very in making the simulators as they were very strict about it. They were afraid of the market situation also, since their information can affect the market. So, all the simulator of the on line trading ensures that all the information regarding the stock market as well as the data may not be used or function in the actual trading of the stock market after, before or during the stock market hours.
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The amateur thinks winning in the market is about predicting the future. The amateur buys some shares and hopes the market rises. He has no idea what to do if something unexpected happens. He wings it completely and ends up trading with his emotions. There's nothing more destructive to wealth than emotional trading.
The market is a game of probability. It has nothing to do with predicting the future. When you treat the market as a game of probability, money management becomes your most important weapon. What I mean is, the stocks you buy become far less important than the position size you use and the decisions you make after you pull the trigger.
This is the secret to beating the stock market. Maybe one speculator in 1,000 knows this. Until you realize this, you have hardly any chance of making money in the market.
  • Risk a constant amount of capital in each trade... and keep it small.
  • Cut your losses. You are trading against some of the world's smartest people, armed with incredible research budgets and advanced supercomputers. They don't trade as a side job or as a hobby. These people live, eat, and sleep the market.
To control your losses, use a stop loss. This way you know exactly how much money you stand to lose if your stock falls, before you've even entered the trade. The stop loss applies at all times and can never be overridden.
  • If your trading idea shows a profit, add to your position. If it keeps rising, add more.
Social media predicts the stock market. Scientists reported an 87.6% accuracy rate in predicting daily changes in the Dow Jones Industrial Average when they studied the mood of large-scale Twitter feeds.
The market is run by robots, not people.
The "hottest deal" may in fact be an overvalued investment.
Education has a higher return on investment. The Brookings Institution (link is external)reported that long-term investments in stocks, bonds or housing may return less profit than getting a college degree. The benefits of a four-year college degree are equivalent to an investment that returns 15.2% annually.
Online traders don't have a direct connection to the market. You might expect that when you push send or call your broker that the trade is instantly placed. But your broker decides which market to send it to, and prices can change before it reaches its destination. Investors may not always receive the price they saw on their screen or the price their broker quoted over the phone.
You'll always pay more for a stock than it's worth, and you'll always sell it for less than it's worth. It's called a bid-ask spread. The reason for the discrepancy? Purchasers pay the ask price while sellers receive the bid price.
Your fully invested portfolio's returns and volatility depend on whether you've chosen high or low beta stocks. Never heard of it? High-risk stocks that have a beta of 2 will have higher volatility in the market. Apple has a beta of .74, while McDonald's has a beta of .40. If you want to reduce risk (and some profit) increase the number of low beta stocks in your portfolio.
Big bank institutions buy when the stock tanks and sell when it's high. We're all buying in the same market, so what's the catch? Most investors are wired to buy when the market is rallying. But institutions do the opposite.
 


I am not going to go into an every detail that explain the nature of trading( the learning curve and the evolvement of your strategy).
 As it seems that you are just looking for a one simple, yet effective tip.

"COMPLETE AT LEAST 1,000 PAPER TRADES"

I believe this is the most important advice I could ever give to anyone. Many starters want to deposit and start profiting as soon as possible. Eventually most of those fail to become successful.

Trading enough on the virtual currency account can certainly boost up your chances of joining the minority of profitable traders.

Of course, you should also learn about the trading itself and develop the needed skills and strategies. I wouldn't go into the detail,

The main tip - trade, trade, trade. And do analyse your trades before and after entering them. 

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AMITABH BACHHAN PORTFOLIO AND EXPERIENCE


Amitabh Bachchan is turning to be the Big B for Indian stock market as well. Learning from the initial setbacks and mistakes,Bachchan is coming out as an investor we should follow. He started off his investment career in stock market in 2011 by investing in unknown penny stocks which turned out to be disastrous.
In July 2011, Amitabh Bachchan jumped into Birla Pacific Medspa IPO, a company which is engaged in the lucrative business of running a Spa and promoted by the high profile Yash Birla, a person from Birla family with zero business acumen.(Guys.. just search for Yash Birla in Google and you will find interesting guidance from Google).
Our poor Big B smelled a multibagger in Birla Pacific Medspa and bought 16,75,000 shares (1.49% of the total equity) by investing Rs. 1.67 crore at a rate of nearly Rs.10. Soon after listing, Birla Pacific Medspa spiked to an all-time high of Rs. 30, trebling his investment. But things went wrong from there. If you are brave enough, you can check the current price of Birla Pacific Medspa.
Then Bachchan tried his luck in Fineotex Chemicals. After its IPO price of Rs. 72, Fineotex Chemicals jumped to 350 levels. When it started sliding, Amitabh Bachchan thought it is a good opportunity to increase the stake and bought 3 lakh shares between Rs. 170 to Rs. 150 per share. Currently it is trading @ Rs. 42. Till now he has not sold a single stock and holding nearly 5% of the total equity,waiting patiently for revival.
Seeing these setbacks, a famous stock broker said-"He should not be investing in penny stocks and these unknown firms. He should not be wasting his money. A person of his stature should invest in blue-chip stocks. A regular trader can experiment with penny stocks. There are several other investment opportunities which Bachchan should explore".
And yes, he learned from the mistakes and for the third time, got it right. The Amitabh Bachchan bought 92,030 shares of Neuland Labs. At the CMP of Rs. 424, the investment has given 800% gain in the past four year.
Amitabh Bachchan Latest Stock Portfolio
In 2011, being the brand ambassador for Just Dial, Bachchan was given 62,794 shares at a throw away price of Rs 10 each. Originally, Bachchan's 62,794 shares were valued at Rs 6.27 lakh. The value of these shares spurted to Rs 3.83 crore on the debut day after IPO in 2013, as per its listing day price of Rs 611.45 each. Currently the stock is trading @ Rs.1250
His fourth pick, Stampede Capital, an unknown company to many, was a surprise to all. He bought the shares in several lots between 14th May 2014 and 6th June 2014. His first bulk purchase of 110,000 shares was on 14th May 2014 at a paltry price of Rs. 88 per share. Today, Stampede is at Rs. 520. This means that Amitabh has made a mind-blowing profit of nearly 500% in about a year’s time. His holding of 847,500 shares is worth Rs. 43 crore. Stampede Capital has molded itself into a global financial technology house specializing in "Automation of Knowledge Work" and Cloud Computing for financial markets.
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TURN CROREPATI WITH THESE STOCKS

Tejas Khoday
Tejas Khoday, Co-Founder & CEO, www.fyers.in
To turn ₹10,00,000 (Ten Lakhs) to ₹1,00,00,000 (One Crore), you will need to clock a Compounded Annual Growth rate (CAGR) of 25.89% yoy as shown in the calculator below:
To do it yourself checkout our CAGR Calculator.
There are only a handful of stocks which have delivered that kind of CAGR growth in the last 10 years. You will have to bet on industries which have a massive scope for expansion and whose companies are all in the growth mode. In the long-run profits are what drives stock prices up regardless of short-term news and technical moves. So ideally, you got to focus on profitability of companies as the underlying deciding factor. Compounded Profit growth of some of them are:
  1. Bliss GVS Pharma = 54%
  2. Aurobindo Pharma = 48.3%
  3. Yes Bank = 44%
  4. Torrent Pharma = 38.8%
  5. HDFC Bank = 30.2%
  6. Lupin = 29.63%
  7. Sun Pharma = 27%
  8. Godrej Consumer Products = 26%
As you can see, the pharmaceutical industry in India is booming and Indian companies are increasing their market share in the generic drugs space. A little research will show you that Indian companies are going to play a major role in the world market in the coming years. All this growth has happened without any major patented drugs and R&D developments. This Industry has a big scope to expand and does offer long-term wealth creation.
Such stocks are an ideal match for your goals.
Even the IT sector has not clocked such growth numbers in the last 10 years. Now considering that past performance is not a guarantee for future results, you should be able to find great opportunities in the following sectors in my opinion.
  1. Large defense manufacturing companies.
  2. Private Banks
  3. Listed Insurance companies.
  4. Consumer goods that gain quick traction.
Hope it was fun reading this answer.
Co-Founder & CEO, Fyers - Your Next-Generation Online Stockbroker
P.S - Do NOT invest in mutual funds if you’re attempting such high returns. Mutual funds are a safe play and they often diversify their portfolio to a point that it hurts performance. This is a widely accepted fact. It’s just that its not spoken about so openly. The returns cannot be compared to individual stock investments. That’s the bottom line.
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ADD AN HOUR EVERY DAY TO PROSPER

Neha
Neha, Life? Incomprehensible. Living? Peace.
In 30 days? While there's nothing better than determination and perseverance of doing the things you are supposed to do to make your life better, we also can't deny the fact that an efficient use of the early morning hour or the golden hour can do a lot better to you! But for that, you're gonna have to wake up early regardless of any excuses for procrastinating it.
Let me quote Richard Whately : “Lose an hour in the morning, and you will be all day hunting for it."
No wonder he might have applied the same in his life. Whately never woke up lately! (please pretend you didn't read this awful joke and kindly read further :v)
But we all know that waking up early could be a daunting task for most of us, it seems like a battle in itself! The moment alarm clock buzzes we just put it off with our partial vision as we are so badly trapped in that “slumbering hug”. Therefore, here are some tips that might help you pull away from that irresistible hug.
  1. Get excited. The night before, think of one thing you’d like to do in the morning that excites you. It could be something you want to write, or a new yoga routine, or meditation, or something you’d like to read, or a work project that’s got you fired up. In the morning, when you wake up, remember that exciting thing, and that will help motivate you to get up.
  2. Jump out of bed. Yes, jump out of bed. With enthusiasm. Jump up and spread your arms wide as if to say, “Yes! I am alive! Ready to tackle the day with open arms and the gusto of a driven maniac.” Seriously, it works.
  3. Put your alarm across the room. If it’s right next to you, you’ll hit the snooze button. So put it on the other side of the room, so you’ll have to get up to turn it off. Then, get into the habit of going to the bathroom to pee or brushing your teeth, once you’ve turned it off. Once you’re done, you’re much less likely to go back to bed. At this point, remember your exciting thing.
Now that you've woken up dear,
  1. Drink a glass of water. You’re dehydrated from not drinking any water all night. Drink a full glass of water if you can. It’ll make you feel more awake.
  2. Meditate. Even just for 3 minutes. It’s such a great way to start your day — doing nothing, just sitting, and practicing mindful focus.
  3. Exercise. Go for a walk or a run, or do a home workout. Even just 10 minutes.
  4. Enjoy a cup of coffee or tea. Either one of these makes the morning better.
Now you would feel confident, productive, fresh and most importantly positive!
These were some simple tips that if you apply in your regular life, it does show its results!
Now don't think much, set your alarm for tomorrow morning, and get set for a positive day in your way. Obviously, it doesn't just takes away all the problems you go through in your regular life, but having a fresh positive mind does give the strength to face them and believe me that is enough!
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EARN ONE PERCENT PER DAY IN STOCKS


Dean Rubine
Dean Rubine
Sure.  I did it yesterday.  Oh, you meant every day.
There are about 250 business days in a year, so if you started with $1, after a year you'd have 1.01250=$12.03
, an annual return of 1100%.  That's of course a very good year for an investor, but not unheard of.  It's unlikely to have happened by a steady ratchet of 1% a day.
But if you could keep it up, after 30 such years, that's around 1032
 dollars, or more than 1018
times all the money on earth.
During their heyday, some high frequency trading firms were rumored to require very little capital, hold no overnight positions, and be profitable every day.  Technically (depending on how little capital was actually required) they would return much more than 1% a day, every day.   Maybe 10% a day, maybe 100%, maybe 1000%, maybe more.  But they couldn't really increase the amount every day, so they didn't get the crazy compounding effect.  That is to say, they were getting a huge return on the small amount of capital required to run the system, but a much smaller return on their total equity, which was mostly just sitting around in a cash account that kept increasing.  They did get zillions of dollars at a steady rate, like a broken ATM that just keeps spitting out cash, so don't feel too bad for them
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HOW DOES FLIPKART WORK


Rahul Kanadia
Rahul Kanadia, about.me/rahulkanadia
The technical term for the model is Marketplace Model. The essence of these businesses is controlling inventory management over anything else. The execution may differ from company to company. Let me explain...

Firstly, all of this business models are centered around growth. They spend more in gaining customers as compared to retaining them.

Like a good e-commerce site, they offer two things primarily: range of products, and ease of use. This in turn gains them higher traffic. Essentially, more footfall, in retail terminology.

This model is based on a low-cost structure. The companies work towards reducing their costs so that they can offer a lower than marketplace price to its customers. This is not the same as gaining more customers. Here's how...

Let's say you are a book publisher. Traditionally, 10,000 copies of books are printed, stacked, and then you try to sell them. Once the copies are exhausted, you print another 10,000. Here, you reduce your printing costs marginally, but in turn invest in storage. By rule of thumb, about 16% of your stored products will go towards wastage i.e. copies torn, smudges, dropped, lost, et al. Plus, a reasonable amount of your capital is invested without guarantee of returns.

What these e-commerce sites do is, eliminate the storage part or reduce it to bare minimum. So if you order a book from amazon, it is printed exclusively for you - not pulled from a warehouse somewhere, but freshly printed for you. From the printer it goes to the courier, and from there it comes to you.

If it's electronics, they place the order with the supplier, who then sends it to the e-commerce company or to the courier, depending on size and policies. From there, it's delivered to you.

Do you see the beauty here... You pay upfront to a company that does not have the product you need. Then wait for the product to be prepared exclusively for you, and then it gets delivered.

The question is, why then do you need these companies at all? The answer: pricing. These companies survive and operate solely on reducing the cost of purchase. They do not invest in the product or in the storage. What they invest in is people who will follow through the entire process - from taking your money, to delivering your product

The suppliers agree to reduce the prices because of the quantities these companies purchase from them. For example, Flipkart buys more laptops from Toshiba on a daily basis, than many of their authorized franchisees do weekly.

The major investment for these companies is online presence and maintenance, and the people involved in the process. Flipkart started with an office in 2007. Today it has 6 office buildings and a transit-warehouse. All of this, while 9 of its 11 product lines are operating at a loss or near-loss classification. The e-commerce companies survive and operate on a single mantra: low cost = higher gains.

Some add-ons:

1. The suppliers and the products are generally managed with an open-ended ERP system. The websites hire people under the designation of Business Development to negotiate and follow-up with the suppliers on a daily basis. It is not left to call centre executives.

2. The products are stored by the supplier except for in-transit. In-transit as in, say a fridge arrives today and can only be delivered tomorrow. The e-commerce company stores it temporarily in such a case.

3. The ERP system and coaxing from the website BD executives is responsible for stock tracking and inventory management.

4. If a product is returned, the product goes to the e-commerce company and to the supplier thereon. The supplier bears the cost of bad delivery. Courier charges are generally fixed by pulse (100 deliveries daily, for e.g.) and hence are not a factor in such a case.

4. Order tracking is a combination of courier company's tracking system and of the company's executives maintaining the records using the same ERP module. The courier company executives input and update the delivery status.

5. The delivery addresses are not shared with suppliers; just the addresses for the courier warehouse or the company warehouse.

6. The payment of suppliers is handled weekly or monthly depending on the company policies, and the credit limits the supplier agrees to extend.

7. Genuinity-check is not a big process part. The suppliers are exhaustively back-checked before being allowed to sign-up. They get a limited number of strikes or bad deliveries before they are taken off the suppliers' list. These problems are generally reported by the customer. Checking every delivery eats into too much cost and time of the company.

8. The profit percentages differ from product to product, supplier to supplier. With books it is as high as 40%, with laptops and accessories nearer to 26%, while with phones it goes as low as 5%.

Conversion rates for these sites are of 2 types:

1. Visit-to-registration
This is the sign-up process. It is usually done as a precursor to purchase or to check if the registration leads to unique offers and discounts.

This rate is 5-8% including unique visitors, and people who have forgotten passwords or are creating a second login ID.

2. Click-to-purchase
This is the actual conversion to sale. Generalized trend is 2%. Anything above 1.5% is considered average. Above 2.5% is spectacular.

80% visitors leave the site within first 30-60 seconds - either due to undesirable usage experience, bandwidth issues or after checking the price of the product. The conversion rate among the users who stay longer is 3-5%. This is a subset of the previously mentioned 2%.

These statistics hold true for all 4 sites you have mentioned. The outliers are the special offers, promotions, and super-sale days. All of these statistics have a huge variation depending on the product lines you consider. They can be broken to many, many more levels of analysis.

The payment gateways used by these sites are generally 3rd party. Even by Indian standards, the dollar-converted charges are too heavy to be taken upon. Plus along with the power of owned payment gateways, comes the responsibility of security, and necessity of adherence to KYC, anti-money-laundering, anti-terrorism and such norms. Up until recently, even Amazon chose to use the PayPal services instead of developing an independent gateway. It's not without reason. Let the sites do the selling, let the bankers handle the money.

I think i have covered almost all aspects of the e-commerce business. At least as much within this space as i could, without making it boring.

Please write to me here or on huckster@outlook.com if you have any more queries and questions.
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From Your Quora Digest
Is it possible to earn 1% per day in stock market?
Dean Rubine
Dean Rubine
Sure.  I did it yesterday.  Oh, you meant every day.
There are about 250 business days in a year, so if you started with $1, after a year you'd have 1.01250=$12.03 , an annual return of 1100%.  That's of course a...
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How is the job life in RBI?
Kakashi Malav Gupta
Kakashi Malav Gupta, Working at RBI
Updated Oct 28, 2015 · Upvoted by Naveen Kumar Singh, Manager-designate, Reserve Bank of India
I joined RBI 8 months back as an Assistant.

As I  interact with  officers on daily basis I know the salary, perks, facilities, lifestyle, overall career opportunities and work profile of direct re... (more)
From Your Quora Digest
What can I do an hour a day that will make my life better in 30 days?
Neha
Neha, Life? Incomprehensible. Living? Peace.
In 30 days? While there's nothing better than determination and perseverance of doing the things you are supposed to do to make your life better, we also can't deny the fact that an efficient use o...
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Answer written
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How can I make 500 rupees daily from the Indian stock market if have only 10000 rupees to invest?
Akansha Sharma
Akansha Sharma, I love commodities
I will tell you exactly how to make Rs.500 or more everyday with Rs.10000. Everybody has a system and I’m willing to tell you how I would make Rs.500 almost everyday, if I were you.
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START OF INVESTING STARS IN INDIA

Sumit Bhatt
Sumit Bhatt, Chartered Accountancy Student
  • Rakesh Jhunjhunwala
Jhunjhunwala grew up in Mumbai, India where his father is posted as an Income Tax Officer. He graduated from Sydenham College and thereafter enrolled at the Institute of Chartered Accountants of India.
Jhunjhunwala is the chairman of Aptech Limited and Hungama Digital Media Entertainment Pvt. Ltd. and sits on the board of directors of various Indian companies such as Prime Focus Limited, Geojit BNP Paribas Financial Services Limited, Bilcare Limited, Praj Industries Limited, Provogue India Limited, Concord Biotech Limited, Innovasynth Technologies (I) Limited, Mid Day Multimedia Limited, Nagarjuna Construction Company Limited, Viceroy Hotels Limited and Tops Security Limited.
Rakesh Jhunjhunwala Success Story from 5k to 1.8$ Billion
Rakesh Jhunjhunwala, the name that needs no introduction. The legendary investor who is known as the Warren Buffet of India. Lets check out the success story of Rakesh Jhunjhunwala and his journey from 5000 Rs to 8000 Crore.
Rakesh Jhunjhunwala was born on 5th July 1960. He father was an Income tax officer. His father was interested in stocks and used to discuss about the stock market with his friends. Rakesh as a child would listen to them. Once he asked his father why the price fluctuate. He told him to check the news, it makes the price to fluctuates. This was his first lesson of stocks market. He got fascinated by stocks and found it interesting. He expressed his wish to get into stock market to his father. He told him to do whatever he wanted in life but at least get professionally qualified. Rakesh then took up chartered accountancy and completed his CA in 1985.
After completing the CA he told his father that he wanted to go in the stock market. His father reacted by telling not to ask him or any of his friends for money. Earn and trade with your money. He started his career in 1985 when the BSE Sensex was at 150. He made his first big profit of Rs 0.5 million in 1986 when he sold 5,000 shares of Tata Tea at a price of Rs 143 which he had purchased for Rs 43 a share just 3 months prior. . Between 1986 and 1989 he earned Rs 20–2.5 million. His first major successful bet was iron mining company Sesa Goa(now Sesa Sterlite). He bought 400,000 shares of Sesa Goa in forward trading, worth Rs 10 million and sold about 2-250,000 shares at Rs 60–65 and another 100,000 at Rs 150–175. The price rose to Rs 2200 and he sold some shares.
Jhunjhunwala bought 6 crore shares of Titan in 2002-03 at an average price of around Rs 3. The stock is currently trading at 390 Rs level and his investment value is now 2100 crore, which made around 35 lakh per hour for him. In 2006 he bought lupin around 150 Rs which is now trading at 1100 levels. He bought crisil around 200-300 levels which is now at 1800. Likewise there are so many stocks in his portfolio that made huge money for him.
His philosophy
Rakesh Jhunjhunwala believes in power of mistakes. He says its the mistakes that made him to learn and become a better investor. he says. “If you don’t believe the markets are supreme, you will never admit that it was your mistake. If you don’t admit that it is your mistake, you will never learn. To succeed in the stock market, not only is the ability to learn from one’s mistakes vital, he says, but also to blame only oneself for it. “I don’t blame the promoters of companies. I blame myself. The promoter is what he is. I have to recognise that. He is not what I expect him to be.” Jhunjhunwala says what he has learnt in life is to try and earn money in trading and to invest it in stocks.
His believe on India
Jhunjhunwala says he is bullish on the country growth since he entered the stock market. He insists the Indian economy will grow by 9-10 percent, though that may need a transition of two to three years. Jhunjhunwala’s thesis is that Indians will save $1 trillion a year, and even if 10 percent of that money—$100 billion —flows into the markets, there will be a tsunami on the bourses. “So I remain bullish that, for the next 20 years, we could see a bull run like the one Wall Street had from 1987.”
His daily routine
He wakes up at 7.30 and does some exercise. At 9 am he watches TV to get update about market opening. At 10 he gets ready for work after having breakfast. Around 11.30 he reaches his office talks to his people, checks mails, reads articles and watch the trading screen. 4 PM onwards he meets the people at the end of the trading hours. At 7.30 he leaves for home, after reaching home he plays with his children and looks into his daughters homework. At 9.30 he takes dinner and after 10 goes to bed.
  • Radhakishan damani
He is a low-profile stock market veteran who invests on his own account. His portfolio includes a string of blue-chip stocks that he has been accumulating over the years. Notable holding is a 26 percent stake in cigarette maker VST Industries, an affiliate of British American Tobacco. A big chunk of his wealth also comes from hypermarket chain D-Mart, which he set up and grew into a chain of more than 70 outlets, mostly in western India. He has pledged $8 million to a Bangalore institute and $1.8 million to the new Ashoka University.
Fast Fact: His close friend is fellow investor Rakesh Jhunjhunwala (ranked 51) who refers to Damani as his 'guru'.
Mr Damani started his career as a trader in ball bearings, far from the battlefield of bulls and bears. Following his father’s death, he shut shop and joined his brother’s stock broking business, inherited from their father. Just 32 and lacking knowledge of market dynamics, Mr Damani’s only asset was his keenness to learn.
“He was not a value investor to begin with; he began his career in the stock market as a speculator,” says a Damani watcher. Mr Damani was quick to realise speculation was the not the best way to grow capital. Inspired by the legendary value investor Chandrakant Sampat, he started playing for the long term.
Often, his strategy was simple. When he bet on Indian Shaving Products (now Gillette), his reasoning was, “People will shave no matter what.” It took Mr Damani some time to gain a foothold, and several of his initial bets flopped. But he steadfastly refused to follow the herd, and concentrated on evolving trading strategies of his own.
Gradually, he began getting his calls right, and within the next couple of years he had joined the ranks of the big boys on Dalal Street. “Few players possess the kind of patience he does. But when he is convinced about any stock, he would buy his desired quantity in one sweep. And if he felt that a stock had run its course, he would dump his holdings at one go,” says an associate.
Also noted was his promptness in cutting losses. “Unlike many other players, ego would never get in the way of his booking losses,” says the associate. Mr Damani himself once said, “Cutting your losses is like performing a surgery on one arm with the other; painful, but it has to be done, otherwise the arm may have to be amputated.”
Mr Damani likes to keep a low profile. “He is not very articulate and does not communicate much, but he is a great listener. He patiently hears out everybody and never scoffs at any idea. It is a different matter that at the end of it all, he would back his judgement and instinct,” says the associate.
All along, Mr Damani made some great calls both on the long and short sides of the market. Yet, many players viewed him as a bear rather than a bull. “In India, anybody who is skilled at short selling is frowned upon, the general perception being that short sellers destroy value,” says a close friend of Mr Damani.
His limited circle of friends is said to include Dalal Street’s latest cult figure Rakesh Jhunjhunwala. Often, the market believed they hunted as a pair. Even if one of them was active at a counter, broking circles would say the duo was in it.
A string of successes notwithstanding, it was the epic battle of 1992, in which he emerged victorious, that would mark Mr Damani as a stock market legend. It was the battle with the Big Bull, Harshad Mehta.
Reining in the Big Bull
The flashy Harshad Mehta shot into prominence thanks to a daring rally that lasted the better part of 1991, only to eventually fizzle out in April 1992. Mr Damani, on his part, was bullish on the market only till February 1992. Even as the Big Bull was pumping up the shares, Mr Damani began to go short.
He reasoned blue chips had already run up a lot and fundamentals no longer justified the rally. What Mr Damani had not bargained for was the seemingly limitless supply of funds to Harshad Mehta. The market kept rising, but rather than cutting his losses, Mr Damani rode on his conviction and doubled up his short positions. “The market took off vertically between February to April, and RK was trapped badly,” recalls a veteran broker. “His losses were huge, and if the rally continued for a few more weeks, he may even have had to shut shop.”
But then, it emerged that Harshad had been siphoning off funds from the banking system and using them to buy stocks. When the scam got exposed, the market went into a tailspin. Mr Damani not only regained the lost ground, but walked away with a tidy profit.
Harshad Mehta was to lock horns with Mr Damani once more in 1998, but this time with fatal consequences for the Big Bull. Harshad now focused on three stocks, BPL, Videocon Industries and Sterlite. The prices of these shares touched dizzy levels even as the broader market fell. It was as though Harshad’s picks were defying gravity.
All the time, Mr Damani was biding his time on the sidelines. A disciple of the old school of investing, his assessment was that the stock price had run far beyond fundamentals. At the time he thought was right, he started building short positions.
Prices continued to climb and he had to square off some initial positions at a loss. But soon, signals came that the Big Bull was having trouble financing his positions. And Mr Damani moved in for the kill. He simply doubled his short positions, under the weight of which, the market caved in.
Panic set in. The prices of the three chosen stocks plunged 60%. Some brokers say exchange authorities even tried to bring together Mr Damani and Harshad for a compromise but the talks failed. “It would be wrong to say that RK’s call was motivated by a desire for revenge,” says a market watcher who once worked with Mr Damani.
“It was all about the price… He would have short sold those stocks irrespective of whoever had a bullish view on them,” he says.
When Mr Damani came to know that some small shareholders were left with positions they could not exit, he covered up a part of short positions by buying shares from these investors at a negotiated price. This was not the first time he had done such a thing. In the early 90s, Mr Damani had accumulated a pile of ACC shares.
When a payment crisis loomed, Mr Damani responded to a request from authorities and offloaded a part of his holding at a discount. He was among those probed by regulators for suspected price hammering, but was eventually given a clean chit.
Towards the fag end of 1998, the overall market sentiment began to improve. Before long, the market was in the grip of a bull run led by technology stocks, which would peak out in February 2000. RK continued to trade, but those close to him say he had already begun scaling down the number and size of his bets.
Was he preparing for a self-imposed exile from the market beginning somewhere in 2001 for the next few years? Friends say he was always passionate about retailing, but were there other factors also that influenced Mr Damani to retreat from Dalal Street?
After the stock market crash of 2001, bear operators were once again under the regulatory scanner, the allegation being that they had colluded to hammer stock prices. Needless to say, Mr Damani also figured on the list of suspects. “Like any other operator, RK made most of his money being on the long side of the market,” says a broker who knows Mr Damani for long.
“He had a finger on the pulse of the market and would not hesitate to sell short if the situation called for it. Unfortunately, his short (selling) calls attracted more attention than some of his long (buying) calls,” he says.
Some players say that Mr Damani found himself a bit out of depth during the technology boom of 1999-2000. He stuck to the classic rules of trading, short selling shares that he felt were over valued and going long on the under valued ones.
But stocks from the sectors that he had an sound understanding of, cement, automobile, steel, were out of favour. Technology was the buzzword at the bourse, and irrespective of whether those companies were making money or not, investors were falling over each other to buy into them.
And Ketan Parekh had now taken over the as the reigning Big Bull, and carved out a reputation for himself as a champion of new economy stocks. Mr Damani’s old school strategies did not work well for him in this period.
The comeback
If anyone had not noticed, Mr Damani’s right calls on Tata Steel and State bank of India made them aware of his return to the stock market this year. But this time, it has been a mixed bag of hits and misses, those close to him say. “Over the last one month, he has been as successful or unsuccessful as other players in his league,” says a Damani watcher.
It may be premature to judge the old fox when the markets have not shown a clear trend. India, like other equity markets around the world, has been volatile over the last month as a result of the crisis involving sub-prime loans in the US. It is anybody’s guess how things will go from here.
The market has also undergone a sea change during Mr Damani’s absence. The number of participants, stocks and liquidity have risen manifold. If there is greater transparency, there is also more volatility to contend with. Admirers or critics, everyone is impatient to know whether and how Mr Damani is going to pull it off this time.
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