August 31, 2015

BANK NIFTY monthly charts

- trend is down and will reverse on close above 19250
- next supports around the range formed by 14000-15000


NIFTY monthly charts

- biggest bar (red) formed in 2-3 years
- close is still above 7950
- trend reversal level 8650 spot (monthly close)
- next support 7400-6400 (these levels may or may not come).


NIFTY futures intraday charts

- breakout from initial trading range was bullish (first arrow)
- resistance offered at 8050 - see line for significance
- trailing SL hit (black line)
- short signal at 2nd arrow
- trailing SL hit (black line).

Note there implementation of a more "strict" trailing SL. For long positions, this is below the low of most recent bull bar and vice versa. This gives faster exits at cost of higher whipsaws.


Market outlook

- trend is down on daily charts
- today, markets failed to above Friday's high; AD negative.
- support at 7950 spot holding
- below 7950 spot, more downside possible
- possibility of retest of recent lows
- slower pace of correction (if it happens) is bullish


August 30, 2015

QE 1, 2, 3 and now 4?


FPIs press exit button, takes out Rs 17,555 cr in August

Overseas investors have pulled out Rs 17,555 crore (USD 2.65 billion) from the Indian capital markets in the month due to sharp global sell-off triggered by a rout in Chinese equities.

The net outflow by Foreign Portfolio Investors (FPIs) come following a net investment of Rs 5,323 crore last month.

FPIs withdrew a net amount of Rs 16,936 crore from the equities till August 28, while they pulled out Rs 619 crore from the debt markets during the same period, translating into a net outflow of Rs 17,555 crore (USD 2.65 billion), according to data available with the depositories.

The final figure for August is likely to change as there is still one trading session left.

Read more at http://www.financialexpress.com/article/markets/indian-markets/fpis-press-exit-button-takes-out-rs-17555-cr-in-august/127673/

Rajan hints at rate cut; inflation down quicker than expected

WASHINGTON: Indicating an imminent rate cut, RBI Governor Raghuram Rajan has said inflation has come down to the comfort zone quicker than expected and he is keeping a watch on data to see how much room is there for further easing of the monetary policy.

"We are on a phase of accommodation. We are still in that phase. We are looking at the data to see what more room we have," Rajan said.

Read more at: http://economictimes.indiatimes.com/articleshow/48731271.cms

SEP 2015 stock market crash

List of some interesting videos


RIL, ONGC, SBI, BHEL, L&T could be out of Sensex in 10 years

This is wild speculation but I will not be surprised if this happens.

I have seen many bluechip stocks, so called A group stocks fall by the wayside and become shells of their former shining days of crowning glory.

Index heavyweights stocks such as Reliance Industries (RIL), ONGC, Larsen & Toubro (L&T), State Bank of India (SBI) and Bharat Heavy Electricals are among the 15 stocks that could see an exit from S&P BSE Sensex over the next decade, according to a June 2015 study co-authored by Saurabh Mukherjea, CEO (institutional equities) at Ambit Capital, titled 'The Sensex in 2025.'

Ambit Capital says high chance Sensex hitting 22000

Ambit Capital says that there is a high risk of the Sensex dropping to as low as 22,000, as the odds appear to be in favour of a continued yuan devaluation.

Exit the fantasy, enter the reality

As the fantasy of a ‘secular bull market’ fades, we cut not just our FY16 GDP growth estimate from 7% to 6.8% (driven largely by a drop in industrial growth) but also our end-FY16 Sensex target from 32K to 28K.

We further highlight that there is a high risk of the Sensex dropping to as low as 22K, as the odds appear to be in favour of a continued yuan devaluation. The combination of a enfeebled banking system, a sliding real estate sector and a PM determined to reset the way the Indian economy works makes India a risky investment destination. To mitigate this risk, we recommend that investors focus on financially robust, market leading franchises which are trading at sensible valuations.

Simple NIFTY options trading strategy

This is one of my favorite plays on nifty options and takes advantage of time decay.

The trade is to short nearest call and buy the next call above in the series (100 point gap). Here the view is of limited upsides. This works best when premium difference is 40-50 points.

This is an example of a trade I took on Friday.

August 29, 2015

Bitcoin Interest Grows in India From Cross-Border Payments and Corporate Support

Tech giants including Microsoft and IBM have been supporting Bitcoin startups, conferences, accelerators and developers in India. The efforts of these companies are beginning to pay off, as India has seen a gradual increase in the number of developers and freelancers in the Bitcoin ecosystem.

“There is lot of interest from freelancers in India who suddenly are now getting bitcoins from U.S.-based companies, and then they scramble to understand what is bitcoin,” Indian Bitcoin startup Blockonomics founder Shiva Sitamraju told Bitcoin Magazine.

Why QE4 Is Inevitable

Why have global markets reacted so violently to Chinese developments over the last two weeks? 
There is a strong case to be made that it is neither the sell-off in Chinese stocks nor weakness in the currency that matters the most. 
Instead, it is what is happening to China’s FX reserves and what this means for global liquidity. Starting in 2003, China engaged in an unprecedented reserve-accumulation exercise buying almost 4trio of foreign assets, or more than all of the Fed’s QE program’s combined (chart 1). The global impact was indeed equivalent to QE: the PBoC printed domestic money and used the liquidity to buy foreign bonds. Treasury yields stayed low, curves were flat, and people called it the “bond conundrum”.
Fast forward to today and the market is re-assessing the outlook for China’s “QE”. The sudden shift in currency policy has prompted a big shift in RMB expectations towards further weakness and correspondingly a huge rise in China capital outflows, estimated by some to be as much as 200bn USD this month alone. In response, the PBoC has been defending the renminbi, selling FX reserves and reducing its ownership of global fixed income assets. The PBoC’s actions are equivalent to an unwind of QE, or in other words Quantitative Tightening (QT).
What are the implications? For global risk assets, they are clearly negative –global liquidity is falling. For fixed income, the impact on nominal yields is ambivalent because private safe-haven demand for bonds may offset central bank selling. But real yields should move higher, inflation expectations lower, and there should be steepening pressure on curves. This is indeed how markets have responded over the last two weeks: as if the Fed has announced it is unwinding its balance sheet!

Nassim Taleb's Fund Made $1 Billion On Monday

You can't say Nassim Taleb didn't warn you: the outspoken academic-philosopher, best known for his prediction that six sigma "fat tail", or black swan, events happen much more frequently than they should statistically (perhaps a main reason why there is no longer a market but a centrally-planned cesspool of academic intervention) just had a black swan land smack in the middle of the Universa hedge fund founded by ardent Ron Paul supporter Mark Spitznagel, and affiliated with Nassim Taleb.

The result: a $1 billion payday, translating into a 20% YTD return, in a week when the VIX exploded from the teens to over 50, and which most other hedge funds would love to forget.

Read more at http://www.zerohedge.com/news/2015-08-28/nassim-talebs-fund-made-1-billion-monday-how-other-hedge-funds-did

NIFTY weekly charts

- weekly charts show a hammer with big body
- weekly close has been above support at 7950
- trading above 8100 will be bullish next week.



NIFTY open interest figures

NIFTY open interest is giving mixed clues this time.

Highest OI is in 7800 put option meaning writers are bullish this level will not break this series. Next highest OI is at 8000 put but the difference is not much meaning support can shift to 8000 levels very soon.

Call writing resistance is at 8500 levels.


August 28, 2015

The illusion of liquidity

Financial markets are currently concerned with the lack of trading liquidity despite the actions of central banks to maintain a seemingly unlimited supply of money.

There are two types of financial liquidity: The first is funding or the supply of money, and the second relates to the ability to buy and sell financial assets readily and without high transaction costs. Central bank policies have simultaneously created an abundance of money and a contraction of trading liquidity.

Read more: http://forbesindia.com/article/column/satyajit-das-the-illusion-of-liquidity/40941/1

VRL Logistics



- one of the few stocks still making new highs
- Read more about this group at http://www.vrlgroup.in/vrl_group_logistics_travels_history.aspx

And here is the chart


Market outlook

- trend is down on daily charts
- despite a gap up opening, markets close 100 points off day's highs
- advance decline flat
- option writing giving confusing clues - separate post on this tomorrow
- high chances of retest of recent lows.


NIFTY futures intraday charts

- first bar sets the mood for the day
- first 3 bars defines the range
- note selling at higher levels
- I created a short position in covered calls (short 8100 long 8200) - positional trade
- markets closed 100 points off the days highs


First trade this series

- Short 8100 call Long 8200 call done today
- Max profit 49 max loss 51
- Positional trade
- View: limited upside, retest of lows possible.
- Will consider a naked short trade (puts) when I get signal on hourly charts


IPO to milk investors

August 27, 2015

Pullback rally in global markets

After a fall comes the relief rally or technical pullback. Here moves tend to be large but considering the fall, it does not mean anything much.

Here are some charts - note current bar is dynamic (shown in yellow).

What Would Happen If Everyone Joins China In Dumping Treasurys?

On Tuesday evening in "Devaluation Stunner: China Has Dumped $100 Billion In Treasurys In The Past Two Weeks," we quantified the cost of China’s near daily open FX operations in support of the yuan. 
As BNP’s Mole Hau put it on Monday, "whereas the daily fix was previously used to fix the spot rate, the PBoC now seemingly fixes the spot rate to determine the daily fix, [thus] the role of the market in determining the exchange rate has, if anything, been reduced in the short term.And a reduced role for the market means a larger role for the PBoC and that, in turn, means burning through more FX reserves to steady the yuan.
Translation and quantification (with the latter coming courtesy of SocGen): as part of China's devaluation and subsequent attempts to contain said devaluation, China has sold a gargantuan $106 (or more) billion in US paper just as a result of the change in the currency regime. 
Notably, that means China has sold as much in Treasurys in the past 2 weeks - over $100 billion - as it has sold in the entire first half of the year. Today, we got what looks like confirmation late in the session when Bloomberg, citing fixed income desks, reported "substantial selling pressure in long end Treasuries coming from Far East."
The question or rather, the series of questions, that need to be considered going forward are: 
"What happens when China liquidates all of its Treasury holdings is anyone's guess, and an even better question is will anyone else decide to join China as its sells US Treasurys at a never before seen pace, and best of all: will the Fed just sit there and watch as the biggest offshore holder of US Treasurys liquidates its entire inventory…"

Read more at http://www.zerohedge.com/news/2015-08-26/what-would-happen-if-everyone-joins-china-dumping-treasurys

Market outlook

- trend is down on daily charts
- today markets closed 2% up; advance decline was positive
- VIX dropped substantially today on reduced fears
- there is no lower swing high between 8600 and recent lows
- we also have strong resistance around 8300 levels
- high possibility of a rally to 8300/ 8500 levels



NIFTY futures intraday charts

- breakout above initial trading range (7915 F) was bullish
- cover at close
- signal could be skipped as it came near resistance level


Hourly charts - I have drawn a triangle which might define move from here. Implication is for a small correction/ retest of recent lows followed by a small rally.




August 26, 2015

What If The "Crash" Is As Rigged As Everything Else?

Take your pick--here's three good reasons to engineer a "crash" that benefits the few at the expense of the many.
There is an almost touching faith that markets are rigged when they loft higher, but unrigged when they crash. Who's to say this crash isn't rigged? A few things about this "crash" (11% decline from all time highs now qualifies as a "crash") don't pass the sniff test.
Exhibit 1: VIX volatility Index soars to "the world is ending" levels when the S&P 500 drops a relatively modest 11%. The VIX above 50 is historically associated with declines of 20% or more--double the current drop.

Big range in SEP series options

Option writing for SEP series show support at 8000 and resistance at 9000.

What are option writers thinking as markets are well below 8000?

This is a very important and significant clue.

Trade accordingly with tight stoplosses. 

NIFTY futures intraday charts

- markets trading in a range for 2 days
- difficult trading where a sudden move can be of 50-60 points in 5 min
- trading signals posted on chart
- both long and short trade gave small profits


No buy signal on hourly charts... resistance at 7950 F


Market outlook

- NIFTY trend is down; today it closed 1% in negative - AD was flat
- because of this steep fall, a lot of sideways movement can occur before any reliable buy signal comes
- expect resistance around 8300 levels
- option writing is giving bullish clues for next series
- support 8000 and resistance 9000; final picture will be clear Friday evening.


The Latest Currency War Entrant: India Warns May Retaliate To Chinese Devaluation

When China moved to devalue the yuan earlier this month, it was seen by virtually everyone for exactly what it was: a tacit admission that the country’s economy was in freefall and a desperate attempt to boost exports stinging from REER appreciation of more than 14% in just a little over twelve months.

Of course coming out and accusing China of entering the global currency wars for the sole purpose of supporting the export-driven economy isn’t something that’s politically correct and if you’re China, you want to deflect that criticism so naturally, there was plenty of polite talk about the need to allow the yuan to move in a more market determined way and that rhetoric squares nicely with China’s SDR inclusion hopes.

Ultimately though, trade competitiveness is now front and center in everyone’s minds, especially Asia ex-Japan nations who will now see their respective REERs appreciate even as the weaker yuan means demand from the mainland will be suppressed.

And while we’ve talked plenty about the impact on Asia-Pac and LatAm (especially Brazil, where the trade ministry immediately acknowledged the adverse effect of the yuan deval), we haven’t yet mentioned India where yesterday, in the midst of the turmoil, Central bank governor Raghuram Rajan sought to calm nervous markets by reassuring the world that India is not, for now anyway, in any danger thanks to ample FX reserves and a low CA. Here’s more from Reuters:

Read more at http://www.zerohedge.com/news/2015-08-25/latest-currency-war-entrant-india-warns-may-retaliate-chinese-devaluation

August 25, 2015

ABIRLA NUVO bounces off support - good example


Some influential Dalal Street investors you’ve never heard about

They own shares in hundreds of companies. They have held on to them like family treasures — for decades. The long association and huge cache of shares make them influential on Dalal Street. Promoters dread their unwavering gaze. They can turn AGMs into circuses with hard questions. ET meets some of India's most active minority shareholders.

Just invest and forget about it: Aspi Bhesania
Portfolio: Over 800 Companies

Core Holding Period: 30 Years

The stock market bug bit Aspi Bhesania many years ago. As a trainee at Hindustan Lever, Bhesania would grab a quick lunch and rush to the stock exchange on Dalal Street to catch the action. "Some days I bought shares, on other days I simply walked around the trading ring to get a feel of the market," recalls Bhesania, sitting in his broker's office near the BSE building.

Read more at: http://economictimes.indiatimes.com/articleshow/48337912.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Market outlook

- trend is down on daily charts
- volatility has increased so expect large percentage swings
- Since 8300 was a good support, expect a corrective rally to maximum this level
- Next support 7400-7100


NIFTY futures intraday charts

- initial bias was down
- previous day's low broke
- buy signal on breakout from rectangle around 7760 F
- cover on close 7900 F


In reality my trading was a bit different and substantially volatile.

Took long in circled area with day's low as SL. Got stopped out - this trade was not necessary at all. In hindsight, a short would have been preferred.

Next trade was long again on breakout from rectangle. This time placed a bracket order for trailing SL as I had to go for a funeral in market hours. Got stopped out again in minor profit as SL was too tight.

Looking back where I went wrong - the first signal was not a buy at all and while the second was valid, I should have kept a much much deeper SL. I am still thinking as per old volatility whereas yesterday/ today a 100 point move in 10 min is the new normal!

NIFTY and CNX 500 PE in context of current correction

For those who follow fundamentals and track PE, this is a good post indicating some more pain could be left in the system and why markets maybe still expensive.



Visit http://www.portfolioyoga.com/wp/blood-on-the-streets/

The message in the NSE VIX

The National Stock Exchange’s India Vix’s 64.35% jump on Monday was the highest ever, based on data on the exchange’s website.

Its counterpart in the US, the CBOE VIX index, also known as the fear index, had jumped by 46.5% on Friday. It would be an understatement to say that fear has gripped traders in markets across the globe. NSE’s website doesn’t have data prior to March 2009; it’s likely that volatility was far higher in September and October 2008, at the peak of the Lehman crisis.

The India Vix index currently stands at 28.13, about half its peak of 56.07 in May 2009, around the time of the election results’ announcement. Still, the fact that the index has jumped so sharply in such quick time reflects panic. In the past six trading sessions, the index has risen by 52.67%. In other words, traders are jittery and buying protection using the options market, which started becoming more expensive from last week itself.

Before that, traders seemed fairly sanguine. For most of July and August, the index had hovered between 14 and 16. But now there appears to be hardly any respite. While the markets had stabilized around 11 am after the impact of margin calls wore off, selling pressure has sustained after the European markets opened lower later in the day. It’s not without reason that options sellers are demanding a far higher premium now than they were until a week ago.






Bear market infographic

Source: Bloomberg


August 24, 2015

Open positions

One month ago, open positions were 30+ stocks... over a period of time, this has come down to 6 stocks.

Today, trailing SL got hit on the remaining stocks so these positions will be closed tomorrow.

A graceful exit would have been possible had the correction been not so vicious but then markets are rarely obliging.

On a positive note, nifty is down 8% this month while the open positions are still 2% up (it was 11% up till yesterday).


Big list of stocks selling off

LAST updated: 24-AUG-2015 
  • These charts are for educational purposes only.
  • This is not a recommendation to buy or sell
  • Follow the trend... if stock is above last month's high, trend is up and vice versa.
  • Golden stoploss: min 10% or last month's low (long position).
  • Never risk more than 1% of your capital on any trade.
  • All charts are provided by icharts.in
AARTIDRUGS
AARTIDRUGS chart

Market outlook

- trend is down on daily charts
- today markets broke crucial supports and closed 6% in negative
- advance decline was negative
- today's close is below 7950 and first new low for this year.
- option writing: not clear this time.


BANK NIFTY technicals

- BNF breaks and closes below JUN swing low
- achieves lowest close for this year
- next support 16200


NIFTY futures intraday charts

- gap down open below Friday's hammer sets bearish tone
- break below rangebound short trade
- cover on close


Impulsive nature of fall (hourly charts) means a pullback is in order.


Rs.1000 to Rs.65 L


August 23, 2015

Stock selection checklist for investing


Credit: Sunil Saranjame

Demise of the petrodollar

Last week, in the global currency war’s latest escalation, Kazakhstan instituted a free float for the tenge. The currency immediately plunged by some 25%.

The rationale behind the move was clear enough. The plunge in crude prices along with the relative weakness of the Russian ruble had severely strained Kazakhstan, which is central Asia’s largest crude exporter. As a quick look at a chart of the tenge’s effective exchange rate makes clear, the pressure had been mounting for quite a while and when China devalued the yuan earlier this month, the outlook for trade competitiveness worsened.

What might not be as clear (on the surface anyway) is how recent events in developing economy FX markets following the devaluation of the yuan stem from a seismic shift we began discussing late last year - namely, the death of the petrodollar system which has served to underwrite decades of dollar dominance and was, until recently, a fixture of the post-war global economic order.

Read full article at http://www.zerohedge.com/news/2015-08-22/why-it-really-all-comes-down-death-petrodollar

ITC technicals

Stock looks good if it can sustain above 340.

SEBI disclosure applicable


MCDOWELL support

Stock is trading in a range this year... good support / SL at 3200.


SEBI disclosure applicable

August 22, 2015

Here are all the ways that China can blow up the world's economy

If you took an extended break from early June to now you might be wondering how Greece and China switched places.

Back then everyone was worried that Greece would be forced out of the euro, breaking up the largest economic area in the world. There were concerns about China's slowing growth but little action in the markets to suggest a meltdown.

Then China's stock market imploded, commodities were routed and the country rushed out state support measures to keep everything going and devalued its currency. Meanwhile, the Greek crisis quietened down after a third bailout was agreed.

China became the big threat to global economic stability. There's a lot of fallout but it can all be grouped into three main channels - politics, markets and monetary policy - to transmit doom around the world.

Read more at http://www.businessinsider.in/Here-are-all-the-ways-that-China-can-blow-up-the-worlds-economy/articleshow/48588164.cms

PFC multiple time frame charts

Trend is down on daily charts ... no buy signal

SEBI disclosure applicable


NIFTY sell signal on kplswing indicator

NIFTY has given a sell signal on kplswing indicator (N=20).

Technically, this does not matter much as nifty has been rangebound this entire year so all signals have failed.

Price action trading has given far better results and will always outdo any indicator.

Note that what is rangebound in one time frame can be a trending market in another timeframe.

Here is the current chart showing the signals:

Small Cap index technicals

The small cap index has broken and closed below recent supports.

Trend is down... expect formation of lower swing high and more downsides.

Trend reversal level is 5800.



CNX IT index technicals

Trend is up and will reverse on close below 11800.

Expect more gains above 12400.


FTSE near strong support

Like US markets, the FTSE also corrected substantially this week.

This index is also close to  a very good support area around 6100.



US markets weekly charts

So we now have a correction on weekly charts as well.

The DJIA lost 6% this week... note support at 16500 levels.

August 21, 2015

NMDC retesting lifetime low 92

US markets sinking

US markets are sinking - current bar is dynamic so actual close will be known only later.

DJIA down 270 points


S&P down 1.7% similarly


CEAT still making new highs

Stock has gained 28% this month and 36% this year.


Breakout persists on monthly charts as well


SEBI disclosure applicable

Open positions


NIFTY weekly charts

- trend is up on weekly charts
- today's close has been the lowest in last 4-5 weeks
- overlapping levels make it difficult to pinpoint reversal.
- because of above, the nearest swing low identifiable remains 8000 levels



Market outlook

- trend is down on daily charts
- today, we had gap down opening below support and close at open
- doji formation is bullish
- this will be confirmed if markets closed strongly in positive this Monday
- inability to trade above today's high will imply rangebound trading
- option writing resistance 8500-8600. Now 8200 put no longer has highest OI




NIFTY futures intraday charts

- large gap down opening limits new opportunities for short trades
- low formed by first 2 bars not broken during the day
- 8200 mentioned several times as option writing support this series
- nothing to do except book some profits in positional shorts


Hourly charts show large bullish hammer