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The Buddha Journey

My attempt at Technical Analysis for Ultratech Cement stocks

Disclaimer: Please do not take this as my assurance. This is my first attempt at technical analysis. I would like to describe here the technical analysis based on the market indicators for Ultratech Cement. I have learnt this as part of my course and the analysis part of my term paper on Company analysis of Ultratech. Please give in your comments and keep an eye on the stock. If the stock prices behave the same way as my description please give a pat on the back ;-)

You can follow the same techniques I have mentioned here and apply it to other stocks that you might be interested in. You can use in.finance.yahoo.com or finance.google.com to get these charts for the stock of your interest. Here I have selected Ultratech because , in coming days after elections there are hopes that infrastructure projects will show huge growth. As a result, the same on the cement industry. Below described are some of the important tests before buying or selling a stock. 

1.    MOVING AVERAGE ANALYSIS:

5weeks moving average calculation:

We have taken the closing stock prices from couple of months from capitaline database and calculated the 5 week moving average of the Ultratech prices.

In the above chart of the plot of 5 week MA with closing prices, we can see short-term buy and sell points. To get a clear understanding of several buy and sell points over the past week, we shall consider the industry standard of comparing 50-day and 200- day moving averages of the Ultratech Stock prices. All charts shown in this section are obtained from in.finance.yahoo.com.

When a 50 day MA crosses 200 day MA from below on good volume, this would be a bullish indicator. In contrast when the 50 day MA crosses 200 day MA from above, it confirms a change to a negative trend and is a sell signal. There are 3 crossover points between in the above chart. According to technical rule the first arrow should have been sell indicator. The 2^nd arrow is a buy indicator and 3^rd arrow is again a sell indicator. The first crossover did not give a correct indicator. One reason might be due to high influx of volume. The 2^nd and 3^rd crossover points provide a correct indication of the trend reversal and buy and sell points respectively.

There was a Buy point in October 2013, when the 50-day MA crossed the current stock prices, we can see the trend increased in the next few weeks.

Another observation in the above chart, if we consider past few weeks, moving average lines are above the current prices. So this is a clear indicator that the trend of prices is down. But there has been upsurge in last few sessions, and the 50 day MA is cutting across the current prices.

Verdict: Sell

Reason: If not already exited at the crossover point of 50-day and 200-day average, the trends are down and it is better to sell.

2. RELATIVE STRENGTH INDEX:

RSI = 100 – [100/(1 + RS)]

                                                Average of 14 weeks’ up closing prices

Where                         RS  =  ----------------------------------------------

                                                Average of 14 weeks’ down closing prices

RS= 25,280.05 / 25,317.55

RS= 0.99851881

RSI = 100 – [100/(1+ 0.99851881)]

RSI = 49.962943

The RSI has crossed the 30 lines from below to above and is rising (49.96), a buying opportunity is indicated. 

VERDICT: BUY

Reason: In recent days the RSI seems to be rising above 30, this is a buying opportunity technically, but considering this RSI hasn’t been able to reach the figure of 70 over the past few months, the BUY is not a clear buy indicator.

3.Moving Average Convergence Divergence (MACD) Indicator:

According to the MACD chart in the below figure, the MACD line is above Signal line, which is indication of a strong Buy. Similarly there is no divergence between the MACD line and the current stock prices, which means there will be no break in the current trend. The stock price will continue to rise in coming days. So it is a technically strong buy. MACD value is 0.373 and signal line is -9.29. So MACD is above signal.

VERDICT: BUY

4.TRENDLINE:

The below chart is a trend line indicator of the Ultratech Cements over the past 1.5 years. We can see that there are several cyclical movements happening in the share prices over the period. 

Right from October 2012 till April 2013 is a clear downward trend, whoever had identified the downward trend early would have avoided lot of potential losses. Similarly there is couple of upward trends in the past 1 year, especially from October 2013 till December 2013 is a very good indication of BUY signal. We can observe in both the above downward and the upward trends mentioned, the movement of trend is accompanied by 5 waves according to the Elliot theory of waves. Both in buying as welling selling phases we can see short waves where some people would have tried to book profits or avoid losses respectively.

The last trend that we observe here in the chart is a huge downward trend which started in January 2014 and continued till February 2014. Off late we observe a short spurt of Ultratech towards upward trend in the last couple of sessions, due to which the stock prices rose by 6%. This quick reversal in the trend could be due to some external news that Ultratech is in plans to acquire Jaypee’s Cement production assets in Himachal Pradesh, which might help Ultratech increase their domestic capacity and make a strong foothold in North India.

VERDICT: BUY

Reason: Recent external news causing some upsurge so suggesting a BUY.

5.Comparison with the BSE index:

If we see the comparison of prices of Ultratech and BSE over the past 1 year, Ultratech has been constantly growing above market. Due to its strong technicals in MACD, RSI , Moving average and the trendline, we suggest a BUY for the Ultratech shares.

OVERALL VERDICT: BUY

A guide to decide on buying a Term Insurance Plan

      The reason for writing this blog post is because I got some spare time to read Economic Times Wealth supplement last week. The main focus of that issue was on Term Insurance Plans. Which ones to buy, what is the need? I largely attribute the info expressed in this article to the ET Wealth info. Please refer to the issue of February 3-9, 2014 for more details.

The article starts with a very thought provoking statement. Imagine if someone's salary reduces by 1%, it might not be noticed. If it reduces by 10%, maybe little effects are seen, if it reduces by 25% lot of lifestyle changes take place and one will alter to accommodate within the available amount. But, what if the whole 100% of the salary vanishes!! Such a scary thought right. If something happens to the main bread-earner of a family, the whole family will plunge into a deluge. All future plans will get affected, for about fancy plans, the basic day-to-day survival becomes pretty difficult. Trust me I had someone very close go through such a grief. So what can one do to protect family and dependents from such a catastrophe. We might have seen lot of innovations in the mutual fund offerings, bond market innovations, similarly I feel that this TERM INSURANCE is kind of innovation in the life insurance policies. By paying as less as 1% of your earnings, one can secure the complete 100% salary even in case of any emergency. The premium amounts are usually as low as 22-25 rupees per day if you take at an early age.

So what are these Term Insurances? What is the need, when there are other insurance products available in the market? What advantages do these provide over the traditional policies? Which policy should one buy? Maybe these are the possible questions already cropping in your minds. Let me try to provide clarity on some of them if not all. 

To begin with, the returns from traditional insurance policies are not at all worth in this age of rising inflation. Usually the policies like LIC have a very low return of around 5-6%, and the ones that are market linked - forget about it - they are as certain as Rohit Sharma's innings ;-). So it is in this context, that the term insurance policies become very attractive and worth investing in.  I will try to provide certain bullet points, probably by the end of which all your questions might be answered. Btw, these term insurance plans are hated by insurance agents, as they don't have much provision for commission and also one term plan covers whole lifetime.

1.Online Term Plans v/s Offline Term Plans:

            Online term plans are approximately 30-40% cheaper than the offline term policies. Some of you might be skeptical as to how can the online plans be 30% cheaper premiums, there must certainly be some catch. Let me assure you, there is no catch. The online plans are cheaper because, there is no commission involved to any agents, from the insurance companies' point of view, the person buying a online plan is a educated, reasonable earns well, is concerned about protection, in case of emergency has easy access to healthcare. So because of these factors the online plan customer is a low risk customer for the company. So the company is justified in giving the benefits to the customer.

2. Increasing Insurance cover:

    In certain plans there are these options where your term coverage will increase by 5% on the base every 5 years. For example, suppose you have bought a policy for 50Laks, after 5th year, your coverage will be 55Laks. But as per ET Wealth, it is better to go for a full regular term plan rather than the increasing cover. The need for the insurance is more in the middle age 40-55years, when the committment are more. If any emergency situation occurs in the first 5-9 years, the coverage will be less, whereas in the traditional policy you will have the full coverage. Also if you calculate the premium paid in both the cases, it is very much negligible.

3. Single Premium:

    It is advisable to go for a regular premium than the Single Premium, because, if you keep the lumpsum Single premium in a FD, the interest earned can be used to pay the regular premium yearly. Also there is one more argument, if any emergency situation happens in the initial years , you would have paid the full premium, whereas in the regular policy you would have paid only for few years. Also one needs to take care that the premium is paid on time every year. If the premium payment is missed, the policy lapses. So it is better to opt for a ECS bank payment or some sort of reminder every year.

4. Staggered Payouts:

     This option is useful in case the nominee cannot handle the large sums. The payout is spread across certain stages when the money is disbursed. 

 5. Return of Premium:

    According the ET, this option is not much useful. As the premium you have to pay for this kind of policy will be very high, almost double. Also if you take into effect the inflation over the years, the return of premium will have meager value after 25-30 years.

There might be one more concern about the Claim Settlement Ration. This is one of the important factor. But one need not worry much. If you have declared your health conditions correctly at the time of buying a policy, there are very less chances that the claims will be rejected. So please be frank in admitting any health condition.The premium might be little higher, but will be secured against claims rejection. Also please opt for any policies which require health check-up. Health checkup in a way provides a guarantee to the insurance provider about the customer, so the premiums may come down a little. 

So all said, which one is the best term policy available? There is no single answer. There is a huge list of companies providing various options in investing. Please go through the list compare the features, prices and then decide. You can find the list here.

http://www.jagoinvestor.com/2010/12/term-insurance-plans-comparisions-india.html

Also I would like to thank ET Wealth for such a comprehensive article for the benefit of the readers. You can refer to the complete article here http://economictimes.indiatimes.com/personal-finance/insurance/analysis/insurance-cover-which-term-plan-is-for-you-/articleshow/29701605.cms

Marriage Registration Procedures- How not to get cheated

This post might serve as ready reckon-er or checklist for couples wanting to get their marriage register in Sub-register office. I will list of some of the points:

1. Which sub-register office should I go to?
• You will have to go to a sub-register office in the location. where you presently are residing or where your marriage was held.
2. Do not fill the online application that you find on web. Some offices, atleast the ones that I visited insisted that the application found on web is just a format and you need to take the application from the office and fill it.
3. After filling application please go to the registration desk and submit to the person who is sitting and working. Trap Alert: Do not entertain people who are standing and trying to help. They are probably the attenders of the office, who make your life miserable by trying to do everything for you and then in the end charge a hefty fee. Marriage registration is the simplest procedure, you do not need any help, so do not entertain people offering help to you.
4. Proofs needed:
• Address Proofs of the bride and the groom
• Age proofs of the both
• Present residing address proof
• Address Proof:
• Ration Card, Aadhar Card, Voted ID Card, BSNL telephone bill, LPG Gas bill - latest month, driving license.
• Chances of you getting cheated are more if you are not carrying any of these valid proofs. If they say one of the document is not acceptable, show them the board(in the office) where all these are listed. Also tell that you can get other document if needed, do not show your helplessness for not carrying any of these.
5. 2B size photos of the bride and the groom together:
• 5 photos of the 2B format is needed, bride and the groom together.(White/Blue background)
• Trap Alert: Sometimes they say marriage costume(traditional costume of Hindu wedding) ,might not be acceptable in Visa office, so better get a photograph in the studio next door. Watch out for this trap. Though I am not very sure about the requirement for Visa. I guess there might be an arrangement between the studio and the workers at the office who send you to get photos again.
• You need atleast 1 joint photo of bride and the groom of the wedding day (either reception or with the traditional wear). Photo size is normal photo.
6. Witnesses:
• You need to enter details about 3 witnesses and get their signatures with date. So if you are taking the application to the witnesses, enquire their ages and fill it up.
7. After they have typed all the details, read it carefully and ensure there are no typing errors in name and address.
8. Trap Alert: Application, fees including everything the cost will not be more than 115-120 rupees, but the attenders may ask insane amounts like 600 . Especially people who do not know the local language be extra careful. 
9. Carrying all the valid documents will help you be on a strong foot and not compromise with the attenders and clerks in the office. 

Please feel free to comment if I have missed any other important information. Hope this helps. Wish you all a very Happy New Year 2014.