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 – 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: 
AMARAJABAT - AUROPHARMA - BOMDYEING - CUMMINSIND - DCBBANK - ESCORTS - FSL - GNFC - GODFRYPHLP - INFY - IOLCP - ITC - PVR - RECLTD -TRIDENT - UBL - UJJIVAN -

Sell signals:
GRAPHITE - IBULISL -

Stocks gaining >5%:
APTECHT - ASIANTILES - BEPL - BIRLACORPN - CASTROLIND - DHAMPURSUG - DIXON - EQUITAS - FSL - GAYAPROJ - GODFRYPHLP - GUJGASLTD -INFIBEAM - IOLCP - J&KBANK - KILITCH - LUXIND - MEGH - SAKUMA - TRIVENI - WIPRO -

Stocks losing >5%:
ISEC - MOHOTAIND -

Stocks at 52 week high:
AARTIIND - APOLLOHOSP - BATAINDIA - IOLCP - KILITCH - PUNJABCHEM - PVR - SAKUMA - TORNTPHARM -

Stocks at 52 week low:
ALLSEC - ASIANTILES - BEARDSELL - BYKE - CALSOFT - GDL - GPPL - HINDCOMPOS - HMVL - IGARASHI - IL&FSTRANS - KHADIM - LEEL - LUXIND -NILKAMAL - PITTIENG - RANEHOLDIN - SADBHIN - SPMLINFRA - STEELXIND - SUNCLAYLTD - SUPPETRO - TIFIN - TPLPLASTEH -

Nifty 200 stocks

Stock nameCloseChange20 Day Swing IndicatorLast Month's52 week
TrendDateStoplossReversalHighLowHighLow
||||| 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

BANK NIFTY charts

- trend is up
- support below 27000
- resistance 27800

January 11, 2019

Market outlook

Daily charts:
- trend is up on daily charts
- today NF closed 0.25% in negative at 10795
- AD was 7:10

- option writing support 10500 resistance 11000 (highest OI)

- nifty continue to trades within triangle
- the triangle is getting smaller
- expect a big move once breakout happens

NIFTY 15 min chart

- support 10760 resistance 10900
- rectangle height 140

- on breakout, expect min move of 100-150 points

- my bias is downwards

Comparison of NIFTY futures and ATM options charts

Markets opened around 10900 F this month and are still trading around same levels.

Here is the NIFTY futures hourly chart:

How I analyse NIFTY options open interest data

Every option trade requires a buyer and a writer (seller) both holding diametrically opposite views about the direction of the market. So one has to be bullish and other has to be bearish (otherwise a trade will not happen).

An option buyer has limited losses but can benefit from unlimited profits. The option writer needs to invest large sums of money for limited profits while exposing himself to risk of unlimited losses.

So why will someone write options? The reason is PROBABILITY and the way the option product is structured. It is something like insurance you buy in order to mitigate the risk of some unforeseen event happening. If nothing happens, you lose the premium otherwise you can get a large payout.

January 10, 2019

Market outlook

Daily charts:
- trend is up on daily charts
- today NF closed 0.3% in negative at 10823
- AD was flat

- option writing support 10500 and resistance 11000

- nifty still trading within triangle; range getting smaller

Is history in favour of small caps in 2019?

Source: twitter

January 9, 2019

Market outlook

Daily charts:
- trend is up on daily charts
- today NF closed 0.5% in positive at 10855
- AD was 7:10

- note markets are trading within contracting triangle
- this makes for a difficult trading environment
- we are nearing the end of the triangle
- breakout from here should give a move of 400-500 points

- option writing support 10500 resistance 11000 (highest OI)

S&P 500 hanging man near resistance


All that matters is AUM



AUM = Assets Under Management / mismanagement?

January 8, 2019

Trade logs by Keshav

* Exited from the short position in BN at break even. Was not confident to hold it. 

* Extreme range bound. As explained in Market outlook post by KPL sir, i will take aggressive trades once market breaks the triangle pattern in nifty and raising wedge pattern in BN.

* Below is the Renko chart (Nifty) of box size 100. Once a trend forms, one can trade in that direction and attempt for pyramiding at every box. It enhances the profit factor.









Rising wedge seen in BANKNIFTY

- if lower trendline breaks, correction to 26400 possible on hourly charts
- on daily charts, correction to 26000 is possible

Market outlook

Daily charts:
- trend is up on daily charts
- today nifty closed 0.3% in positive at 10802
- AD was flat

- option writing support 10500 resistance 11000

- nifty trading in triangle (contracting, last stage)
- expect a move of 500 points when breakout happens (direction unknown, bias downward)

Outperformance in Down Markets 100% of the Time? #ETF #NIFTYBEES

On almost a daily basis, I’m seeing headlines and hearing emotional pitches about the current dangers of index funds, with warnings about the ways they might harm investors in more volatile or bear markets. With ongoing market drops and large swings, this talk is sure to persist.

I would encourage many of the commentators predicting doom about index funds to tone it down a little, however, (emotion rarely leads to good long-term investing decisions) and, along with investors, to review the following studies.

The studies aren’t perfect, but they do seem to provide useful down-market data.

What do they show?

An S&P Dow Jones report from 2009 might be a pretty good place to start.

This report showed that, “A majority of active funds in eight of the nine domestic equity style boxes” underperformed their appropriate indices in the 2008 down-turn and produced “similar outcomes” in the 2000 and 2002 bear markets.

Read more at https://prestondmcswain.com/2019/01/04/outperformance-in-down-markets-100-of-the-time

Statistics is about avoiding these kind of mistakes



My notes: the medical science research and the food industry is full about nonsensical correlations.

January 7, 2019

Introduction of NIFTY weekly options

First expiry starts from Valentine's day i.e. 14-FEB-2019


Read more at https://www.nseindia.com/content/circulars/FAOP39894.pdf

Open positions and stoploss


StockClose% ChangeBought atBuy DateRemarksTrailing StoplossReturns %
ADANIPORTS381.65-0.1334615/11/2018Hold long positions35010.24
BAJAJ-AUTO2658.55-2.77272429/11/2018Exit trade2680-2.40
BAJFINANCE2553.60-0.87240216/11/2018Hold long positions25006.31
BRITANNIA3143.800.68297416/11/2018Hold long positions30405.72
COLPAL1303.00-0.54114816/11/2018Hold long positions128013.54
DABUR420.450.2941926/11/2018Hold long positions4100.33
DRREDDY2558.65-1.59252919/11/2018Exit trade25601.19
HAVELLS693.552.2166613/11/2018Hold long positions6604.11
HDFC1972.900.02182513/11/2018Hold long positions18808.12
HDFCBANK2120.650.15200416/11/2018Hold long positions20605.81
HINDUNILVR1784.950.18167113/11/2018Hold long positions17606.81
KOTAKBANK1246.60-0.11116916/11/2018Hold long positions12006.67
RELIANCE1104.750.56112716/11/2018Hold long positions1080-2.01
SIEMENS1062.05-0.0698116/11/2018Hold long positions9808.21

Market outlook

Daily charts:
- trend is up on daily charts
- today NF opened gap but closed near day's low at 10776
- trading was small and well within the triangle developing for past few weeks
- AD was flat

- option writing support 10500 resistance 11000 (highest OI)
- increase in 10700 put OI
- looks like rangebound trading can continue for some more time

- lower trendline to offer support...

Trade logs by Keshav

* Exited from the short position at break even.

* Nifty started to go down as soon as i exited. Made no new trades.

* Made no profits at all in past one week & thankfully no loss too.


Next trade will be considered when nifty breaks out from triangle pattern. But took a small short position (0.5% risk) in banknifty. Reason being price getting rejected at known resistance. Lets see !!


Trading after a big gapup @PAVLeader




January 5, 2019

BANK NIFTY charts

- trend is up
- support 26400
- resistance 27500

NIFTY weekly charts

- H&S formation seen
- neckline 10000
- right shoulder being formed
- resistance 11000-11200 region

- trendline added



January 4, 2019

Trade logs by Keshav

* Punched my predefined stop loss orders around 10 when nifty was going down below yesterdays low.

* After that went for a long drive to Mangalore. Looks like nifty made so many wild swings. Price action traders paradise and trend traders nightmare.

* My second short trade is now no more. Got exited at break even.

* Stop loss for First short trade taken day before yesterday is at break even ( 10880) . Trailing stop loss for hourly chart is around 10900. I will keep this in mind and see how hourly chart behaves on Monday and take decision. Trend is down on hourly now.


Market outlook

Daily charts:
- trend is up on daily charts
- today NF closed 0.5% in positive at 10727
- AD was flat

- observe how NF is trading in contracting triangle
- trading environment to get difficult due to range compression

- option writing support 10500

8 companies to drop out of large-cap list

According to SEBI’s ‘categorisation and rationalisation of mutual fund scheme’ norms, large-caps are defined as top-100 companies in terms of market-cap, while companies from 101 to 250 in market-cap have been classified as mid-cap and the rest are tagged as small-cap stocks. Following the turmoil in the stock market in the last few months, stocks such as Aditya Birla Capital, Bharat Forge, Shriram Transport Finance, Sun TV Network and TVS Motors, besides public sector companies such as Bharat Electronics, BHEL and Hindustan Aeronautics may fall out of AMFI’s large-cap list.

Some of the stocks that will enter the large-cap list include Berger Paints, Divi’s Labo

Read more at https://www.thehindubusinessline.com/markets/8-cos-to-drop-out-of-large-cap-list/article25901448.ece

Capitulation phase in US markets?






Right shoulder being formed in NIFTY




January 3, 2019

Equity curve ( by Keshav )




I tried to make equity curve of my trades since past two weeks. In y axis i have the percentage gain i made or lost and in x axis it is the trades taken. Rite now i am in positive. Lets see how it turns out in future.

While doing this equity curve i got a weird doubt in my mind. Will it be better to trade this equity curve or simply invest in it ?

What i mean is just like how trend trading works i.e., buy when the price is moving up and exit when it starts to move down. Here one will be trading only when the system's equity curve is moving up and stop when it shows sign of draw-down.

Will it help in escaping long streak of losses ? Making an equity curve of performance of this new method would be an answer , Or it will turn to be an infinite stupid exercise ........ !!

Comment your opinion😊