QUANT SYSTEM OVERVIEW & SYSTEM TRIGGER - CONTD 13.05.24

From the desk of Capt.D.Ganesh Raja                                                                       

DISCLAIMER

Please be informed that the author of this blog by Capt Ganesh Raja Dhanuskodi (Hereinafter called Capt Ganesh) is not a SEBI registered Research Analyst or Financial Advisor. Capt Ganesh writes this blog to express his views based of more than two decades of experience in capital markets and based on the Quant system which he has invented and he does not do this for “consideration” as per SEBI regulations, which means he does not receive economic benefit through it. Readers of this blog must seek advice from registered Investment Advisors / Research Analysts before taking any trading or investment decisions.

Capt Ganesh has been investing and trading actively since 2001, building trading models since 2013 and has invented an AI based intraday trading system, which has a pending patent approval.

Dear Friends,

Let’s continue from where we left last .  

Before forming view on Indian market let’s look at global markets. It was not long ago when they were expected to fare badly due to inflationary pressures, which was due to high energy prices. But energy prices were within manageable levels and I have covered in my previous blogs about this.

Israel has entered Rafah border even after strong warnings from various nations. I follow this whole conflict from a very different perspective and beyond the scope of this blog. Russia-Ukaraine war has become a new normal. Russia has said will carry out nuclear drills. Bab-el-Mandab crisis due to Houthis attack on commercial shipping is another issue.

In this backdrop, global markets have been rallying. So this indicates that “risk on” mode of investment is still prevalent albeit with moderation.

Let us focus again on domestic markets and issues . FIIs have pulled out about Rs.17000 crores from Indian market but we cannot view FIIs as a monolith, there could be various reasons for selling and once of that is election outcome, which we have covered yesterday in detail.

Tracking the deficit in domestic economy, we can see that there has been a secular drop in all the indicators , namely , Fiscal deficit, Effective revenue deficit, Revenue deficit and Primary deficit, except for a brief spike in 2020-2021 due to Covid disruption. Government is focusing on fiscal consolidation, estimating to being it to 5.1% by 2024-25. The figure stands at 5.8% now and 0.1% below the targeted figure. You have to read this in context of an election year. Why such fiscal prudence, unless they have a high degree of confidence in them forming Government again.

Combining the readings of 10 year GS index , VIX and the liquidity position riding in the market, there is a high probability of a relief rally in short timeframe. Weather this is a continuation of the strong uptrend which was in progress, needs to be seen. The “Buy every dip”, which was so prevalent till now might be changing.

Flood of IPOs are lined up to hit the market for fund raising and hefty listing premiums are the norm of the day. This in addition to massive oversubscription shows the liquidity sloshing in the market. This is one of the indicators of pent-up demand and “eager money" as I would like to call it.

Nifty has been rangebound since January 2024. The rally from 16945 on 24.03.23 to 21894.55 on 12.01.24, is currently oscillating in this range. The previous correction was zig-zag between July 2023 to December 2023 and as per rule of alternation, this might be a flattish correction, typical of a lack luster wave 4 of Elliot wave count. There is still weekly wave distortion due to higher order wave. Time cycle analysis done before also showing possible turning points in Nifty around 1st week June 2024.

Mid cap indices are slightly different than Nifty, because they are still not in sell mode in spite of dire predictions given by many seasoned market participants. Some have even said that it is in frothing stage. The weekly chart shows a wedge formation in midcap indices, which may mark the top and timeframe seems around mid- June 2024.

These are the reasons why Quant system has still not given an exit on the stocks in Mock Portfolio. Having said that it might be system prompted and happen anytime in near future. Many traders follow a rigid system of targets and stop losses , but that approach fails to factor in the changing scenario . The flip side is, it might give away part of the profit when reversal is in progress.

Chart  wise following sectors seem strong for now and there is no trend reversal:  metals, manufacturing, infrastructure, seems strong .

Sectors which look weak: IT,media, private banks, realty

Sectors which might see churning: oil and gas, pharma,PSE.

I will conclude with that and will post system exits as and when triggered.

Mock portfolio returns have contracted by 5.59% in this present selling.

RETURNS TILL DATE SINCE 04.07.20 : 148.30.% (AS OF MONDAY 13.05.24 CLOSING) 

LEVERAGE FOR EXISTING MOCK PORTFOLIO TRIGGERS: 1.60

SYSTEM EXIT DELEVERAGE: 0.00

LEVERAGE FOR NEW MOCK PORTFOLIO TRIGGERS: 0.00

TOTAL LEVERAGE: 1.60

ASSET ALLOCATION PROFIT POTENTIAL FOR NEW PORTFOLIO TRIGGERS : NA

TIME PERIOD OF TRADES RECOMMENDED : 15 DAYS TO 3 MONTHS.

MOCK PORTFOLIO.pdf

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