Building Up A Portfolio At A 7000 Level

[rvgandhi]

So, what was the reason for the big downturn!?
Have they decided not to give bonus?

Crompton Greaves plunges
Crompton Greaves plunged 5.71% to Rs 238.50, after the company declared a lesser-than-expected bonus issue.

The company has declared a bonus issue in the proportion of 2:5 ( two shares as bonus for every 5 already existing ones)

As many as 4.71 lakh shares were traded in the counter on BSE. The stock has slipped to Rs 236.10, on selling pressure.

The stock witnessed a solid surge in the past couple of trading sessions, anticipating a liberal bonus issue. From Rs 220.15 on 20 September 2006, it surged to Rs 261.95 by 9 October 2006, as buying momentum continued. Here, it witnessed selling, and settled at Rs 252.95 by 13 October 2006.

Crompton Greaves reported 25% growth in net profit for Q2 September 2006 to Rs 40.66 crore (Rs 32.52 crore). The net profit was above market expectation ( Rs 35 crore). Net sales rose 48.6% to Rs 823.96 crore, which was above market expectations (Rs 700 crore).

 

[harmads]

Harmads,

I have recommeded Amaraja Battery at 260. It is currently Trading at 390 region and I would say it is growing at a good pace. I would suggest a hold on the counter and more accumulation at 355-360 region. I have been studying this for quite some time and read a couple of articles recently - is definitely the best play in the sector.
I do not set any price target for the same but you can keep invested in it.

Exide I think you should shift to Amaraja
EIH good play in the hotel segment and look with a 1-2 years perspective. However Hotel Leela is not a good counter in the Hotel Seg, if you are into it, then you must exit.

To my look, you have a defensive strategy its good

Supratik

Thanks Supratik for your valuable opinion..

 

[ssnkumar]

Crompton Greaves plunges
Crompton Greaves plunged 5.71% to Rs 238.50, after the company declared a lesser-than-expected bonus issue.

The company has declared a bonus issue in the proportion of 2:5 ( two shares as bonus for every 5 already existing ones)

As many as 4.71 lakh shares were traded in the counter on BSE. The stock has slipped to Rs 236.10, on selling pressure.

The stock witnessed a solid surge in the past couple of trading sessions, anticipating a liberal bonus issue. From Rs 220.15 on 20 September 2006, it surged to Rs 261.95 by 9 October 2006, as buying momentum continued. Here, it witnessed selling, and settled at Rs 252.95 by 13 October 2006.

Crompton Greaves reported 25% growth in net profit for Q2 September 2006 to Rs 40.66 crore (Rs 32.52 crore). The net profit was above market expectation ( Rs 35 crore). Net sales rose 48.6% to Rs 823.96 crore, which was above market expectations (Rs 700 crore).

Thanks for the reply Gandhi.
I don't understand why the Bonus/split has such a big effect.
In both these cases, the stock value is proportionately brought down. So, the value of my holdings on the day of split/bonus remains the same after that event.

So, how does a retail investor gets benefited in this?
Does the market cap increase after bonus issue?

Even TCS got split few weeks back and people were speculating steep raise etc.
But, when compared to Infosys, it hasn't apprecieated that much.

So, I think there is lot of unnecessary hype created around split/bonus news!

-Narendra

 

[diosys]

yes very true....there is no advantage...only thing since th value gets less the reatail participants are able to buy into the stock a lot easier....

Overall it is just a gimmick of the management to bolster share prices.....no advantage at all....

 

[supratik]

Hi All,

Deccan Chronicle is on fire – high risk traders can buy into the counter – the valuation is not stretched but the sudden run-up can be a cause of decline – a 500% jump in net profit --- oops that’s way beyond market expectations

Fro peaople who have bought it already at low levels can surely buy this counter - I see not much of a downside - although trading at a 52 week high.

Thanks and Regards
Supratik

 

[rvgandhi]

I don't understand why the Bonus/split has such a big effect.

If you look at the recent bonus declared by Infy/TCS/Sona Steering. Most of the prices have returned to the level before Bonus was declared but the quantity of shares held has increased hence wealth has been created.

This is true of Blue Chip counters and Crompton being one of them the expectations from company were high.

 

[ssnkumar]

If you look at the recent bonus declared by Infy/TCS/Sona Steering. Most of the prices have returned to the level before Bonus was declared but the quantity of shares held has increased hence wealth has been created.

This is true of Blue Chip counters and Crompton being one of them the expectations from company were high.

They would have gone up, even without split.
Compare them with other such good companies, which didn't announce bonus or splits.

One thing I can understand is, by bringing down the price, it comes to the reach of many retail investors.
And Bonus will introduce more shares and more people purchase.

But, other than this, is there any other reason or advantage with these activities?

-Narendra

 

[supratik]

The main reason for a stock split or bonus is equity dilution
It is affordable to buy Lakshmi Mills at 1000 than invest in a 25000 share.

That is the picture.

fyi
in a bonus issue a person having one share of Rs 10 face value would get another share of the same face value should the company go for a 1:1 bonus what would happen in a stock split is his one Rs 10 share would now be converted into ten Re 1 shares.

Thanks and Regards
Supratik

 

[supratik]

Hi All,

Watch the action flood on KLG Systel and Ansal Housing.
If they can sustain these levels - expect a 330 and 290-305 odd level respectively.

Thanks and Regards
Supratik

 

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