IAPM

STOCK TRADING
SIMULATION REPORT
Group No 7 (Sec A)
BIRANCHI PRASAD SAHOO (PGP/17/075)
PRITAM KARMAKAR (PGP/17/031)
SANJEET KUMAR (PGP/17/075/042)
EKTA PUNN (PGP/17/142)

ICICI Direct Account
Username: BIRANCHI29@GMAIL.COM
Password: B!r@nch!29

Date: 25
th
July 2014 Profit: 97367.28
Stock: ACC
Price expected to decline. Short sold on margin at 1454 and bought it back at 1440
Investment Rational: One of the largest cement companies in India, was expected to announce its
second quarter (April-June) earnings on 25
th
July. Analysts expected the margin and hence the profit
to decline by 7% as manufacturing and distribution costs continued to face escalation. Total expenses
of the company increased by 10 percent at Rs 2,747.87 crore compared to year-ago period due to
higher raw material cost, employee cost, power & fuel and freight charges. Thus the price was
expected to fall and hence the investment rational to short sell.

Date: 28
th
July 2014 Profit: 10509.65
Stock: Coal India
Price expected to rise. Bought on margin at 363.70 and sold at 364.35

Investment Rational: The government had asked Coal India to feed the coal-fired power projects
that were reeling under severe fuel scarcity. The coal ministry pushed CIL to nearly halve its e-auction
to 25 MT in 2014-15 from 58 MT last year. Analysts expected this would lead to delay in production &
hit profitability. This was reflected in the intraday fall in stock price. We believed this decrease in stock
price was more than anticipated by the analysts. The rationale behind this was Government & the
Power Ministers promise to hasten the environmental clearance for CILs 20 new mines which will
boost the output of CIL in the future & hence the profitability. Hence its stock price was expected to
rise in the future. Hence we bought the stock on margin and sold it at a profit.

Stock: ACC
Price expected to rise. Bought on margin at 1402 and sold at 1402.85

Investment Rational: On 26
th
July ACC announced its second quarter earnings. ACC reported a
second quarter 2014 net profit of US$40.1m, some 7% lower than the US$43.1m reported in the
second quarter of 2013. The fall in profit was attributed to higher total expenses. But revenue grew
7.5% year-on-year to US$509m during the second quarter of 2014, aided by higher volumes. Analysts
expected that the higher expenses in raw material will lead to rise in prices of end product cement
and hence ACC will maintain the earlier margin. Also the boom in infrastructure is expected in the
future due to favourable macro conditions and business friendly Government policies. Hence the sales
volume is expected to grow. This will lead to an expected rise in stock price. But as the market was
bearish, hence not much increase in its stock price was seen. Hence not much gain.


Date: 30th July 2014 Loss: 28794.25
Stock: Bharti Airtel
Price Expected to rise. Short sold on margin at 371.89 & Bought back at 373.15
Investment Rational: Bhartis Q1 result was announced on 3oth July. BHARTIs 1QFY15 EBITDA grew
18% Year on Year and 5.7% Quarter on Quarter to INR 77.2 billion driven by strong performance in
India mobile business. Consolidated revenue grew 13.3% Year on Year and 3.3% Quarter on Quarter
to INR 229.6 billion boosted by India mobile, Tele media and DTH segments but dragged down by
Africa business. PAT increased 97% Year on Year and 13.8% Quarter on Quarter to INR13.6b. The stock
price was expected to increase by 5% intraday as analysts had not accounted this extra 5%. When we
started trading this news was already reflected in the stock price. But the stock price had risen more
than 5% intraday. Thus the rational to short sell. But as the market was volatile the stock price further
increased & hence the loss.

Date: 31st July 2014 Loss: 45935.68
Stock: Asian Paints
Price expected to rise. Bought on margin at 632 & sold at 628.65
Investment Rational: Over the last 10 days Asian Paints stock price had continuously risen on back
of strong Qtr results announced on 21
st
July & expected increase in sales because of the expectations
from the upcoming festive season when the paint sales generally increases. Hence the analysts
predicted further rise in prices & thus the rational to buy the stock at margin. But the share price
plunged to 628 during the end trading period. The reason being, as it was the last Thursday of the
month it was the closing day for the future options & hence the futures market was very much volatile
and it drove the price down. Hence made loss in the Asian Paint stock.
Stock: Cipla
Price expected to remain stable/fall. Short sold on margin at 459.68 & bought back at 460
Investment Rational: On 31
st
July Cipla announced a partnership with US-based BioQuiddity Inc for
collaboration to sell the latter's post-surgical pain management product OneDose ReadyfusORTM in
Europe. Analysts were sceptical about the deal as they believed it would not help Cipla strategically.
Hence the price was expected to fall. But the volatility in the futures market, being the last Thursday
had led to an unpredictable fluctuation in price. Hence the loss.

Date: 07th August 2014 & 8th August 2014 Profit: 73219.15 & 122813.02
Stock: ACC
Price expected to fall. On 7
th
August Short sold on margin at 1484.10 and sold at 1473.75
On 8
th
August Short sold on margin at 1454 and sold at 1437
Investment Rational: Cement sector would be in focus for the next one or two years given that the
kind of focus which the new government has towards infrastructure and it will lead to higher cement
consumption. But being a cyclical industry, it depends highly on the macro conditions. Foreign
investors pulled money out of Indian market because of favourable macro conditions in Europe and
USA. This led to high volatility and downfall in the market in 1
st
two weeks of August, & led to decline
in all cement companys stock prices. Hence the rational for short selling as the overall market was
bearish and this impacts most the cyclical industry. But we also predict in the long run as the capital
goods & infrastructure market is currently at the bottom of its business cycle, it is expected to be in
the rise in the future.



Date: 12th August 2014 Profit: 8607.68
Stock: Gail
Price expected to fall. Short sold on margin at 405.6 and bought back at 405.2
Investment Rational: Because of the rise in crude oil prices and government policies for upper price
limit on oil prices the company was making losses. Oil firms were losing Rs 1.33 a litre on diesel, Rs
32.98 on PDS kerosene and Rs 447.87 crore on domestic LPG. This had led to a continuous stock price
decline of Gail in the past 1 week. Hence the rational to short sell the stock. Latter in the day the news
of oil marketing companies to get Rs 11k cr on subsidy in Q1 from government was the main driver in
rise in price of GAIL and other oil and natural gas companies in further weeks. This news was the
reason for all analysts pitching for buy in Gail stocks keeping the horizon in view.

Date: 22
nd
August 2014 Profit: 10456.03
Stock: L&T
Price expected to rise. Bought on margin at 1544 and sold it back at 1546
Investment Rational: On 21
st
august L&T bagged Rs 1,008 crore worth orders in its buildings and
factories business, Rs 624 crore worth contracts in the power transmission and distribution segment
from the international market and Rs 200 crore orders in the heavy civil infrastructure business. Hence
the expected prediction in the increase in L&Ts market price as it will boost its business and hence
profitability & thus the buy rational for the stock.

Date: 25
th
August 2014 Profit: 27026.25
Stock: Jindal Steel & Power
Price expected to fall. Short sold on margin at 254 and bought back at 252
Investment Rational: Supreme Court in its verdict on 25
th
August said that coal block allocation after
1993 were illegal and it was expected impose heavy penalty on the private players. The stock price of
Jindal Steel & Power as a result were plunged by 13% in one day. Hence the short sell investment
Stock: Kotak Mahindra
Price expected to rise. Short sold on margin at 1050 and bought back at 1445
Investment Rational: The proposed banking reforms and a dip in global crude oil prices boosted
investor sentiment along with inspiring speech by Prime Minister Narendra Modi on Independence
Day. The banking sector stocks were bullish in todays trading. We thought during intraday trading the
stock was overpriced. Hence we short the share on margin in the intraday trading. The stock price
finally closed at 1440.
Stock: Maruti Suzuki India Ltd
Price expected to rise. Short sold on margin at 2812 and bought back at 2808
Investment Rational: Maruti Suzuki surged to 52-week high on 25
th
August as Credit Suisse upped
its target price while maintaining its 'Outperform' rating. Its earnings estimated as 15 per cent higher
than the street's. Export grew over 38 per cent to 11,287 units as against 8,154 units in the
corresponding quarter last fiscal. According to Credit Suisse report, the 800cc engine to be used on
the new LCV and existing compact hatches could add ~100,000 units in FY17. But the jump in price
was much higher than that predicted by Credit Suisse. Whereas credit Suisse predicted a rise of 3%
over the earlier prediction, at one point the stock was trading at more than 4% over the last day close
price. Hence the rational to short sell at that point as we predicted the price to be around and lesser
than 2800 for 3% predicted rise in profitability.
Stock: Hindalco Industries
Price expected to fall. Short sold on margin at 162 and bought back at 165
Investment Rational: Supreme Court in its verdict on 25
th
August said that coal block allocation after
1993 were illegal and it was expected impose heavy penalty on the private players. The stock price of
Hindalco as a result were plunged by 10% in one day. Hence the short sell investment. But as the
purchase was done during the closing period of market there were volatility present. Hence the loss.

Conclusion:
Last two months the market has been very volatile due to the uncertainty in the macro conditions.
The new Government at the centre being business friendly is trying its best to introduce policies to
bring confidence in the investors. But the inflation has been still a concern for RBI. So while the
Government is trying to reduce the interest rate to create opportunity for investments, RBI is trying
to curb inflation and hence is keeping the rate higher than the Governments expectation. Further the
better macro conditions in Europe and USA has led the foreign investors pulling out money from Indian
market. Add to this the Iraq and Ukraine crisis which fuelled more uncertainty in the market
conditions. Hence the market is not at equilibrium & its going to take much more than 5 to 6 months
time to reach there.
As a result considering the volatility, its impossible to gain profit & beat the index in a two month
period buy buying stocks and holding it for 2 months. Thus we tried to beat the market through the
intraday trading by targeting valuable companies and taking in to account the current information that
is released every day. Also another issue is all these companies being established and mature they
generally dont have a positive alpha. The positive alpha companies are generally mid capped
companies like Greaves Cotton, Symphony, Havells etc for which the information is not easily available
and hence its not reflected in their stock prices. Hence we did the fundamental analysis by a method
through which we checked the companys financial statements and ratios & then from live feed from
market news tried to invest in those companies that we thought were under-priced (through margin
Buying) or overpriced (through short selling).
We were able to increase the initial amount of Rs 15,00,000.00/- assigned us to Rs 17,75,269.13/-.
Thus we made a profit of Rs 2,75,269.13/-. While the nifty index in this period had rose from 7569.25
on 25
th
June 2014 to 7906.30 on 25
th
August 2014 i.e a net gain of 4.453%, we made a net profit of
18.35% & thus were able to beat the market.