Special Article : Union Budget 2019: What does it mean for the Common Man?

Union Budget 2019

Key Budget Highlights:

– The government set a fiscal deficit target of 3.3%, lower than consensus. It plans to meet this target via increased non-tax revenue from disinvestments (Rs 1,05,000 crore), the Reserve Bank of India’s special dividend, and additional levies on petrol and diesel.

– Public sector banks (PSB) get recapitalization of 70,000 crore. This will be additional relief after the major PSBs improved their loan book quality and coverage ratios.

– Private investment will be encouraged in railways through Public-Private-Partnership (PPP) model. The government also announced 22.6% increase in road development outlay and the Pradhan Mantri Gram Sadak Yojana (PMGSY) completion target was advance to 2019 from 2022.

– The budget reiterates focus on Housing for All. Loans for affordable housing will get tax benefit, which is expected to boost demand.

– The turnover threshold for lower tax rates of 25% has been increased to Rs 400 crore from Rs 250 crore.  Continue reading “Special Article : Union Budget 2019: What does it mean for the Common Man?”

Special Article : Pharma Sector; Large Addressable Market, But Few Concerns Remain

In recent times, margins are under pressure due to pricing demands in the U.S., forcing companies to cut expenses. Delays in approval of new drugs by the USFDA is another issue that pharma companies are facing. There is an increasing opportunity in China as new rules reduce the entry barrier. The domestic market has the potential to boost growth, as India is increasing spending on health care.

The revenue of top 10 Indian pharmaceutical companies was Rs. 1.3T for FY 2018, of which more than 40% was derived from the U.S. market. The major categories of business include generic medicines, marketing of branded generic medicines, marketing of innovator medicines, and the manufacture and supply of active pharmaceutical ingredients (APIs). Continue reading “Special Article : Pharma Sector; Large Addressable Market, But Few Concerns Remain”

Learning Article : How to Spot a Bullish Base-on-Base Chart Pattern

With the stock market turning volatile this year, many stocks have formed base-on-base patterns. Keep an eye out for those, because they tend to be strong chart formations. The base-on-base is, of course, a combination of two bases. The stock forms a base but does not rise much in price from the buy point. That’s often because the general market comes under selling.

So, a new base starts taking shape at a higher elevation than the first. On a chart, the two patterns resemble the profile of two stair steps. Sometimes, the breakout from the second base will come after the selling pressure in the market has lifted.

Here are five characteristics to help identify the pattern:

  • The two bases can be of any proper type: cup-with-handle, flat base, double bottom, cup-without-handle. Usually, though, the second pattern is a flat base.
  • The second base should not encroach much into the price levels of the first. Any base that sinks much into the first base is not a proper base-on-base formation.
  • The buy point is determined by the second base, whatever that is.
  • When counting bases, a base-on-base formation counts as a single stage. For example, don’t count a cup-with-handle as first stage and a flat base on top of it as a second-stage base.
  • If a stock climbs more than 20% from its buy point before it starts forming the second base, consider the two patterns entirely separate, not a base-on-base.

To illustrate the characteristics, let’s take the example of Aditya Birla Fashion & Retail

During June-August 2018, ABFRL formed a flat base. After breakout in August 2018, the stock went up ~10%. But, as the markets started correcting, the stock went down from highs of 215. It then formed a second flat base, broke out from it during February 2019, when markets were attempting a rally.

What do you think? Please email us any questions or comments.

Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.

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Special Article : Bull and Bear Markets and How to Tackle Them

We all are aware of the basic terminology about bull market, bear market, and correction. In simple terms, a “bull market” is when the market moves higher and a “bear market” is when the market moves lower. However, one needs to understand that a new follow-through day and short-term uptrend do not necessarily signal a bull market. Similarly, short-term downtrend does not necessarily indicate a new bear market. Continue reading “Special Article : Bull and Bear Markets and How to Tackle Them”