Calsen Financials

01/02/2022

ALL IN ONE BUDGET 2022 QUICK SUMMARY

DEFICIT/EXPENDITURE
1. Proposes fiscal deficit of 4.5% of GDP by 2025/26
2. Projects fiscal deficit of 6.4% of GDP in 2022/23
3. Revised fiscal deficit for 2021/22 at 6.9% of GDP
4. Total expenditure in 2022/23 seen at 39.45 trillion rupees
5. States will be allowed 4% fiscal deficit to GDP in FY23
6. 50 year interest free loans over and above normal borrowing allocated to states
7. Scheme for financial assistance to states for capital investment outlay to be 1 trillion rupees in 2022/23

TAXATION
1. Import duty on certain chemicals are being reduced
2. Customs duty exemption on steel scrap to be extended for another year for small- and medium-sized businesses
3. Customs duty on stainless steel, flat products, high steel bars to be revoked
4. Unblended fuel to get additional duty of 2 rupees per litre from October 2022

FINANCE
1. Emergency credit line guarantee scheme for small and medium sized businesses to be extended to March 2023
2. Energy transition and climate action will be a major government priority
3. Public issue of Life Insurance Corporation expected shortly
4. Initiatives from last year's budget have been provided adequate allocations in this budget
5. Special Economic Zones Act to be replaced with new legislation
6. To amend bankruptcy code to speed up resolution process
7. Aims to lower winding up of companies to 6 months from 2 years currently8.
8. Long term capital gain surcharge to be capped at 15%

DIGITAL CURRENCY
1. To launch digital rupee using blockchain technology starting 2022/23
2. To launch scheme for taxation of virtual digital assets
3. Losses from sale of virtual digital assets cannot be offset against other income
4. Income from virtual digital assets to be taxed at 30%

DEFENCE
1. Govt committed to reducing defence imports

INFRASTRUCTURE
1. 5G spectrum auctions to be conducted in 2022
2. Scheme for design-led manufacturing for 5G will be part of production-linked scheme
3. To award contracts to lay optical fibre in rural areas, completion in 2025
4. 480 billion rupees set aside for affordable housing in 2022/23
5. To allocate additional 195 billion rupees for production-linked incentives towards solar equipment manufacturing

AGRICULTURE
1. Domestic scheme introduced to reduce dependence on oilseed imports
2. Fund with blended capital raised under co-investment model to finance agriculture startups
3. Railways to develop infrastructure for small farmers in 2022/23

TRANSPORT
1. 400 energy efficient trains to be manufactured over next three years
2. National highways network to be expanded by 25,000km in 2022/23
3. Highways expansion to cost 200 billion rupees in 2022/23
4. India to bring out battery swapping policy

26/10/2021

Ambuja Cements giving a favourable Risk Reward Trade at cmp. As per weekly charts, price is currently sitting at major supports inside an upward trending channel. 365 is a major support level for ambuja cements. Currently it's in the 4th corrective wave and trying to reverse in wave 5 impulse which will take it towards 500, 526+

11/07/2021

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08/06/2021

Technical Analysis : The basic assumptions
The field of technical analysis is based on three assumptions :-

1. The market discounts everything.
2. Price moves in trends.
3. History tends to repeat itself.

1. The market discounts everything :-
Technical analysis is criticized for considering only prices and ignoring the fundamental analysis of the company, economy etc. Technical analysis assumes that, at any given time, a stock’s price reflects everything that has or could affect the company - including fundamental factors. The market is driven by mass psychology and pulses with the flow of human emotions. Emotions may respond rapidly to extreme events, but normally change gradually over time. It is believed that the company’s fundamentals, along with broader economic factors and market psychology, are all priced into the stock, removing the need to actually consider these factors separately. This only leaves the analysis of price movement, which technical theory views as a product of the supply and demand for a particular stock in the market.

2. Price moves in trends :-
“Trade with the trend” is the basic logic behind technical analysis. Once a trend has been established, the future price movement is more likely to be in the same direction as the trend than to be against it. Technical analysts frame strategies based on this assumption only.

3. History tends to repeat itself :-
People have been using charts and patterns for several decades to demonstrate patterns in price movements that often repeat themselves. The repetitive nature of price movements is attributed to market psychology; in other words, market participants tend to provide a consistent reaction to similar market stimuli over time. Technical analysis uses chart patterns to analyze market movements and understand trends.

07/05/2021

ITC will surprise everyone when no one expects.

CMP - 204.90

Get ready for 215, 227, 237.50+

06/05/2021

Chart for TCS :-
See how many data points we are getting here 👇

Upcoming levels - 3241, 3357, 3454+

CMP - 3111.45

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20/04/2021

Richard Wyckoff Theory of Accumulation and Distribution

The Richard Wyckoff Theory of accumulation and distribution focuses on supply and demand for a stock, cause and effect, and the law of effort for a stock.

Here are the five steps to the Wyckoff Method strategy for stock selection and trade entry:

1. What could be the probable future trend of a stock based on its present chart and the market price action? Is the stock market currently under consolidation or is it consistently trending in one direction? What is the current the path of least resistance for the market? Is it making higher highs, lower lows, or going sideways? For this step focus on the stock market indexes. The direction of the trend on the indexes should determine if you are thinking long or short.

2. Choose stocks that are moving in the same direction as the market trend. During an uptrend, choose stocks that are going up more than the general market. Filter for stocks that are a moving a higher percentage up in price than the market indexes on up days and going down less than the market on down days. During a market downtrend, do the inverse, filter for stocks that are going down more than the market index on down days. Look for clear moves on stocks, don’t waste time on ones that are volatile. Look at the trends on a stock’s charts versus the stock market indexes for Step 2.

3. Choose stocks with a “cause” that is equal to or more than your minimum objective. A primary component of Wyckoff’s stock picking and trade management was his strategy for identifying potential price targets using Point and Figure (P&F) projections for trades. In Richard Wyckoff’s fundamental law of “Cause and Effect,” the horizontal P&F count within a trading range represents the cause, while the subsequent price movement represents the effect. Pick stocks to go long that are currently under accumulation or re-accumulation and have a meaningful “cause” for your price target objective. Step 3 uses Point and Figure charts for stock selection.

4. Is the stock ready to move and trend? If a stock is in a trading range after an uptrend, does it look like enough supply of the stock is being sold that a short position could be the best risk/reward ratio? During an accumulation in a trading range, has the supply been traded inside the range through a low volume bounce at price support. Wyckoff used both Bar charts and Point and Figure charts for Step 4.

5. Time your trades with the stock market index turns. 3/4ths or more of stocks trend with the stock market indexes. You can increase the probability of winning trades by going with trades in the same direction as the trend of the total stock market. Wyckoff trading principles try to assist in anticipating the next high probability market moves. His method tries to identify a change in the nature of price action like identifying the largest down bar with the highest volume after a long uptrend. He advised to place your stop loss at entry, then use a trailing stop if a trade went in your favor to maximize any gains until you exit. He used bar charts and Point and Figure charts for Step 5.

These 5 steps are an overview of the Wyckoff method along with his three laws of price action below.

1. The law of supply and demand determines the price direction. This is his central principle and method of trading. When demand for a stock is greater than supply, prices rise, and when supply is greater than demand, prices fall. The technical analyst can study the balance of price between the supply and demand by comparing price versus volume bars on the chart over different periods of time. This law is simple in principle but it takes time and practice to learn to both quantify supply and demand on bar charts and understand how to trade the supply and demand patterns on charts.

2. The law of cause and effect is a filter for the trader to set price targets by measuring the potential magnitude of a trend breaking out from a trading range. Richard Wyckoff’s “cause” can be quantified by the horizontal point count in a Point and Figure chart, while the “effect” is the distance price moves corresponding to the point count. This law can be read as the power of accumulation or distribution inside a price trading range. How this power and force plays out in the following trend or price movement up or down is what this law is trying to project. He used Point and Figure chart counts to quantify a cause and project the extent of its effect.

3. The law of effort versus outcome gives an early warning signal of a potential change in the direction of a trend coming in the future. Divergences between the volume and the price action can many times signal a change in the trend direction. When there are many high volume/large effort but small price range bars after a large up swing in price and price fails to make a new high which shows no result, this can mean that big holders are selling shares and distributing believing a trend reversal in price is near.

07/04/2021

As majority of members have shown interest in cryptocurrencies we have created a brand new channel dedicated to cryptocurrencies and blockchain technology.

Interested members can join through this link given below. 👇🏻

Hi all, this channel is for our views/analysis/trades on the cryptocurrencies for educational purposes only. Cryptocurrency markets are more volatile compared to other markets therefore trade and invest with caution.

13/03/2021

31/01/2021

SPX cmp - 3714.25 has formed bearish WW and since December has tried to break the ETL of 1 & 3 several times and now finally managed to break and close below it on Friday (29th January).
If you see closely it has also made a lower high and a lower low indicating bearishness.

3735 level will act as major resistance for now and until it's below this it's better to avoid longs.

According to Wave Theory as well it appears to have made 5 waves(3 impulse and 2 corrective waves) on the upside and now awaiting an ABC correction on the downside.

For now, expecting SPX to correct another 5 - 13% which will take it to 3550, 3235, 3067 on the downside.

Disclaimer - These views are as per my analysis on the markets only for Educational purposes. I reserve the right to be wrong as markets are above all. Do your own Analysis before taking any trade.

03/01/2021

Stocks for 2021 for wealth creation:-

Varun Beverages cmp - 907.95
Buy in parts around 850 and accumulate on dips till 750 for the Medium-long term.
Targets - 1250, 1625, 2500+

Medium-Long Term BUY Eicher Motors cmp - 2542
Buy on dips till 2200 for 3333, 4100, 4600, 5390+

JSW STEEL cmp - 389.70 soon to touch all time highs of 427.
Break above 427 will take it to 516, 573, 665+

Prestige cmp - 266.80
Add on dips till 250
Upside Targets - 425, 482+

Medium-long Term Buy - KEC 371.95 and add on dips till 300 for 575, 600+

BAJAJ ELECTRICAL Cmp - 610
Accumulate on dips till 500 for 980, 1600+

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13/09/2020

What is the new rule from SEBI on mutli cap mutual funds and what impact it will have on markets?

OLD RULE-

MultiCap mutual funds are just required invest 65% of their corpus in Equity & Equity related instruments.

(Multicap Funds are those mutual funds who can invest in any category of companies irrespective of their size)

NEW RULE-

Multicap mutual funds are required to invest at least-

25% of their corpus must be in Large Cap companies
25% of their corpus must be in Mid Cap companies
25% of their corpus must be in Small Cap companies
What is the criteria for a stock be considered as Large, Mid & Small cap?

Twice Every year AMFI ( Association of mutual funds)conducts this exercise of placing stocks under various caps based upon their Market Cap in descending order.

Companies ranked 1–100 based upon their markets cap are considered as Large Caps
Companies ranked 101–250 based upon their markets cap are considered as Mid Caps
Companies ranked 251–500 based upon their markets cap are considered as Small Caps
SEBI’s Rationale for this change

SEBI says, “With this new regulation, multicap funds will be true to their label” Most multicap funds are were inclined towards large cap only.

Multicap Mutual Fund Manager’s worry :

Flexibility is gone. Even if you do not like a certain category of companies you must invest there. IT COULD HAMPER THEIR RETURNS.

Multicap funds were able to perform well in 2018–2020 because when mid caps & small caps were bleeding they shifted towards large companies.

Deadline :

All Multicap funds must comply with these rule within One month of New list release by AMFI.

New list will be released in January 2021. Meaning these funds have time till February 2021.

Observations, Cautions & possible outcomes :

Over the next few months midcap & small caps companies could see some extra buying as a lot of funds have rebalancing to do meaning excess exposure towards large cap to be cut & increased to midcap & smallcap companies.

If you are a investor in any multicap fund. You should consider whether this new regulation does not alters your exposure towards a certain class of companies.
Your exposure should depend on you investment time horizon, risk, return, liquidity needs etc.

Some people may have to exit their investment in multicaps as it doesn't suit their needs now.
This could be an opportunity of exiting any poor investments you have made in small firms.

If you are dependent on Black Swan events like these for your companies to perform then you have another thing coming.

Don’t just go all in towards investments in small & mid caps just because of this. Your investment should take pointers mentioned in point 2a in consideration.
Mutual Fund companies are sharp too. Instead of shifting their exposure they may just change their fund type from Multicap to Large Cap, Large Cap & Mid cap or Value funds. Their is a slight chance of this & if this happens well.

Kindly do not take any decision in HASTE. Most mutual fund houses are in loop with SEBI to understand how can things move forward from here.