Investment in BSEL Infrastructure can double your money

As can be seen from the chart BSEL Infrastructure deflated from 55 to below 10, investors who bought in at 55 suffered a loss of above 80% if they exited the stock at below 10 Rs. The misery of the investors who bought in at the all time high of above 118 and are still holding it could not be expressed in words. Anyways after hitting a level of below 10 Rs, the return on investment given by the stock to first time investors who bought in March 2009 beat the return on investment which the index gave. Loss from 55 to below 10 stands at above 40 and when the stock traded at 28 in June 2009 it covered 50% of this loss. The Stock again traded in the red and almost gave away its 50% value to trade at 15 in July 2009. The stock has traded between the levels of 15 to 23 from that point onwards.

You can notice from the chart that the stock which saw a accelerated deflation of prices from 22 to 17 and 19 to 15 is slowly losing it momentum. While deflation in prices from 22 to 17, 19 to 16 took place in matter of days, A move from 17 to 15 , consumed much more time then the first three downmoves, the stock seems to taking support at 15 Rs levels and might hit 19 which would be our target 1, 23 our next target 2 in a matter of days. Since the June 2009 top of 28 has not been tested that levels could be our last target.

DLF target 340, 392 stoploss 298

The accelerated speed with which DLF lost value for its investors in January has began to diminish in February. Selling by investors seems to have lost momentum and value buying seems to be emerging. Buy DLF with stoploss 298, first target 340 and next target 392. At 340 return on investment stands at 9% while at 392 return on investment is above 25%

Intraday and Short Term Trading Calls

Bharat Heavy Electricals Limited (NSE Code – 438, Symbol – Bhel) CMP 2245 could be sold intraday with a stoploss 2258 target 2222, Bhel is also a short term sell, BHEL if it trades below 2280 could be sold for a short term target of 1922, the target could be achieved within 30 - 40 days so one can create the trade through Options also, Bhel is not a liquid stock but if the expectation of Bhel trading at 1922 is achieved the Bhel PA OPTISTK i.e Put Option with contract expiry date of 31 Dec 2009 and strike price of 2130 which has last traded price of 31 could be bought in a range of 33-36 which is a fair price if Bhel is trading in the band 2245 – 2255, The lot size for the contract is 150 so the total investment stands close to 5000/- and if the target is achieved the Put Option would be trading at 210Rs, return on investment would be 600% which is quite good. The risk in disinvesting in Bhel through Put Option is that Bhel being not an active stock in Options trade stoploss could not be executed, if you need to place any.

Reliance Communications (NSE Code – 13187, Symbol RCOM) might breakout in the either direction, if it moves up and above 183 which is quite big a resistance then it’s a buy with a short term target of 238 while if it is not able to clear the resistance of 183 in the coming 4-5 days then one can sell it for short term target of 131 and stoploss above 183, trading in RCOM through the option route is not viable idea as Options in RCOM are considerably costlier while the underlying stock is not showing that much volatility. For example RCOM Call Option with a strike price of 190 and expiry date of 31 Dec 2009 is currently trading at 5.8 Rs which means a Call option which is 10% out of money is demanding 3.5% of the Current Stock Price as a premium, on the other hand put option with an expiry date of 31 Dec 2009 and strike price of 160 Rs is trading at 4.7 Rs which is quite a high premium.

Educomp seems to be breaking down and once it moves up to trade at 805 or consolidates just below 780 in coming 2-3 days, one can sell it for a short term target of 578, Once the Stock trades close to 800 or above 780 in 2-3 days one can initiate a short position in the stock through the Options Channel, One can invest money in the Put Option PA of Educomp, The contract should be of Expiry date 31 Dec 2009 and the strike price should be 720, The fair value would be close to 7 Rs, the lot size is 375, so the investment would stand at close to 2500 Rs, if the target is achieved the Option might trade at 140 Rs i.e 20 times the investment price.