January 16, 2019

Market outlook

Daily charts:
- trend is up on daily charts
- today NF closed flat at 10890
- AD was flat

- trading range is getting smaller

- option writing support 10500 resistance 11000

More analysis will not lead to better results

The whipsaw song by Ed Seykota

Modi Wins 'First-Ever' Philip Kotler Presidential Award – But What Is it?

Modi Wins 'First-Ever' Philip Kotler Presidential Award รข€“ But What Is it?

Top BJP leaders praised the PM for winning a prize with no disclosed jury or process – from a marketing group whose organisers ducked questions, calling it "a very confidential award”.

Read more at https://www.thewire.in/business/modi-wins-first-ever-philip-kotler-presidential-award-but-what-is-it-exactly

The World Marketing Summit India is owned by an Aligarh based company ...  and their website at https://wms18.com is down from today morning.  I just wanted to see the jury, the process, competitors etc but bad luck.

Further investigation by The Wire reveals that both the WMS India and Suslence are the initiatives of a Saudi-based team, principally Tauseef Zia Siddiqui, whose online profile describes him as an employee of SABIC – the Saudi Arabian government-owned petrochemical firm, which has been keen to make larger inroads into India’s energy industry.

Read more at https://thewire.in/business/exclusive-the-saudi-connection-behind-modis-first-ever-kotler-presidential-prize

Full marks to the media team which pulled this off... this will go down in history as one of the finest marketing gimmicks at zero cost and zero pain.

January 15, 2019

NIFTY triangle

- just yesterday I mentioned that I am ignoring the triangle
- the reason was false breakout
- turns out it was my mistake and I was looking at the wrong chart

- I was looking earlier at the futures chart and not the spot one
- spot charts are better as effect of expiry premium is ignored

- now on spot chart, triangle is still valid and we have a breakout
- let us see how long will this breakout last

- height of triangle roughly 500 points

Trade logs by Keshav

* Yesterday had taken a short position on break of triangle pattern in hourly charts. I was very hesitant at first. So took very small position. Market turned against me immediately. So exited within few minutes.Loss of around 0.2%.

* Today i was taking a look at renko charts with 50 point box size. It showed the triangle in a neat way. At around 10858 i took a long position with 10750 as SL. Added one more position at 10900.Holding on to it.

* Triangle pattern in this renko chart has nothing to do with my trading decision. I took the trade before the breakout itself.

Swing trading signals :: 15-JAN-2019

Buy signals: 

Sell signals:

Stocks gaining >5%:

Stocks losing >5%:

Stocks at 52 week high:

Stocks at 52 week low:

Nifty 200 stocks

Stock nameCloseChange20 Day Swing IndicatorLast Month's52 week
||||| AMARAJABAT765.400.00%BUY19/12/18710.15710.15758683908683
||||| AUROPHARMA786.552.00%BUY10/01/19708.25697.10830697830527
||||| CUMMINSIND877.702.50%BUY31/10/18825.95772.30867761925613
||||| INFY726.603.50%BUY13/12/18651.00637.35714637755545
||||| ITC296.550.50%BUY09/01/19277.55274.80290268323252
||||| RECLTD126.051.00%BUY28/12/18118.65103.501249916189
||||| UBL1419.202.50%BUY18/12/181345.601300.20141211851467908

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Market outlook

Daily charts:
- trend is up on daily charts
- today NF closed 1.4% in positive at 10887
- AD was 5:3

- today was biggest bar in past week
- we can assume more upsides possible

- option writing support 10500 resistance 11000
- bias is bullish (from rangebound)

How to measure the strength of a trend

Diamonds are rare

January 14, 2019

Market outlook

Daily charts:
- trend is up on daily charts
- today markets closed 0.5% in negative at 10737
- AD was 6:10

- option writing support 10500 resistance 11000

- today markets broke and closed below the lower trendline of triangle
- but pattern breakout implication was pathetic
- ideally there should be a fast/ furious fall but this did not happen
- for all practical purposes, it was as if the triangle never existed
- because of this, I will be ignoring the triangle from tomorrow

- NOTE: when following patterns, always be alert to market behaviour AFTER breakout

Trendline break on BANKNIFTY hourly charts

Trendline break on NIFTY hourly charts

The dangers of high mutual fund inflows

...Equity mutual funds now receive around ₹8,000 crore monthly through a steady stream called systematic investment plans (SIPs). It works out to nearly ₹1 trillion a year.

“In a sense, this is like a pyramid scheme or a game of musical chairs,” says Sanjay Bakshi, finance professor at Management Development Institute, Gurgaon. “The weight of the money coming in is causing a rise in asset prices, which in turn is drawing more flows that then chase the same assets. History shows that this seemingly endless cycle will reverse one day; and when the tide turns, there will be a quick transition from euphoria to hysteria.”

The problem of plenty, in terms of flows, is exacerbated by a problem of scarcity as far as quality stocks go. It’s the classic “too much money chasing too few goods” problem.

Venkatesh Panchapagesan, associate professor of finance at IIM Bangalore, says: “The limited universe of investible stocks for institutions is a problem, and the fact that the markets regulator isn’t doing anything to broaden the universe just makes things worse. So we end up with a situation where mutual funds are forced to buy stocks that they already own.”

Read more at https://www.livemint.com/Money/rTkzp1j8bF5UES4wZz9VyJ/The-dangers-of-high-mutual-fund-inflows.html

Stock Caps In Index Funds

Last week, SEBI made a groundbreaking announcement, defining the criteria for an equity index to be eligible for being tracked by an index fund or an ETF.  Among other things, it capped the weight of a single stock in such an index at 25% (35% in the case of a sectoral/ thematic index). It also capped the combined weight of the top three constituents in such an index at 65%.  I may be wrong but I don’t think that there is any precedent worldwide for such a regulatory intervention.  In this post, I share my initial thoughts on this.

2018 was a very good year for those rooting for index funds and ETFs in India.  For the first time since 2013, a comparable ETF (actually, 3 ETFs) gave a higher return than any actively managed, diversified, domestic equity fund.  And almost all actively managed, large cap funds underperformed the BSE Sensex and Nifty 50 (in terms of returns).  However, there were some uncomfortable questions that lurked beneath the surface.  For instance, were it not for the superlative returns of a handful of stocks, would such outperformance by index funds and ETFs been possible?  And how was one to look at the fact that there was a difference of over 2.5% in the returns of the best performing and worst performing Nifty 50 index funds?

There were also questions about the construction and maintenance of indices.  For example, what was one to make of the massive churn that some indices went through?  By my count, in April last year, the Nifty Midcap 100 had 46 of its constituents changed at one go while the Nifty Smallcap 100 had 55 of its constituents changed at one go.

Read more at http://mfcritic.blogspot.com/2019/01/stock-caps-in-index-funds.html

January 12, 2019

Probable movements and related plans (by Keshav)

I have not taken any single trade since a week. Waiting patiently for the breakout from the triangle pattern in daily charts.

*Since triangle is not any continuation or reversal pattern, there are two possibilities after breakout and hence two target points.But rising channel after a severe fall can be a continuation pattern.

*These two target points match with two important support and resistance zones.

* If breakout happens upside, it meets the exact shoulder levels of H&S pattern in weekly charts. It also might face resistance at the upper line of the rising channel.

* If breakout happens below then its target meets the major support i.e., 10340 level.

My plan here is once the breakout happens i will start to take 0.5% risk per trade and pyramid it up in its direction . Depending on how market reacts at the target levels i will either put a trailing stop and make exit according to it or i will let the pyramided position move in its direction.

A caveat for myself - After breakout the targets may reach or may be not at all. And the path it chooses to reach the target might be smooth or very volatile. If it turns to be volatile then my pyramiding plan gets effected severely. Lets see !! 

NIFTY weekly charts

- trend is up
- markets forming H&S
- current rally looks corrective
- parallel channel seen
- resistance 11000-11200
- support 10000

Contracting triangle in nifty hourly charts

- trend is up
- trading to get difficult as we near end of triangle
- breakout will give a 400-500 point move
- direction unknown

Rising wedge in BANK NIFTY hourly charts

- trend is up
- expect start of correction if 27400 breaks


- trend is up
- support below 27000
- resistance 27800