QUANT SYSTEM TRADE RECOMMENDATION - 04.07.21
- Capt D. Ganesh Raja
- Jul 4, 2021
- 6 min read
From the desk of Capt.D.Ganesh Raja
Dear Friends,
It has been a year since I have been writing this blog and it is time to take stock. As of Friday’s closing, Quant system has delivered 36.73% returns (Peak returns 45%), with Nifty, top liquid stocks in Nifty, Gold, Silver and currency pair USD-INR. The selection could have been expanded to highly liquid midcaps and other commodities traded, but due to paucity of time I could not do it. Also, the objective was to demonstrate the Quant system capabilities and remove the fear of trading for people reading the blog. There were some requests to give calls daily but this was not practicable nor would have been profitable given the use of intraday systems to pin-point entries and exits.
During the same period Nifty has given returns of 46%, beating the Quant system by a wide margin. The mid- cap and small cap indices had a stupendous performance in this period. The argument would go as to why would someone trade based on such a system. Now let us look at the table below:
DATE NIFTY RETURNS SINCE 2016(%)
05.07.2016 8335.95 NA
06.07.2020 1 0763.65 6.60%
02.07.21 15722.20 13.53%
Does this table say something? You can see that there were periods when markets have significantly underperformed and even during those periods the Quant system would have been churning out some kind of returns in similar lines. While doing proprietary trading for some Brokers, giving demonstration to some fund managers and even my own account spread over various periods I was able to demonstrate returns varying between 40% to 70% annualized returns. If we assume black swan events disrupting the market procedures twice a year the system would have had some drawdown but not catastrophic, which impairs trading capital in a big way.
Trading activity has to be treated as a business with focus on the objective of generating profit and protecting trading capital. Based on personal interactions and with wide industry participants, there is need for such systems and going forward we will see more acceptability.
Now coming back to market activity, immediate trend in Nifty as per weekly charts is still up, in spite of the sluggishness seen in past few weeks. As I have informed before we are riding a little longer timeframe so patience is a key. Many a times I have seen traders becoming restless when activity is lacking. Activity has to be meaningful instead of a compulsive behaviour.
Gold: No change in view since last week, except that system gave an exit on 01.07.21 for short term trading. Long term investors to continue accumulating.
Silver: No views for now.
Realty: There have been indications this sector bottoming out and some kind of recovery seen as per charts. I have not been able to find India specific Realty mutual fund to recommend for buying. There are some REITs available but it has to be evaluated carefully based on so many other parameters before recommending.
Note for reading this report:
Note1: The stop losses are on end of day basis
Note2: When trade recommendation is given around a certain price, it means that the trade may be taken the next trading day or if a price zone is given for taking a trade then trade has to be taken on the day price reaches within that zone.
Note3: A separate excel sheet is attached to view the performance of the recommendations, which also reduces the task of individually reporting the performance of each trade recommendation. Viewing the excel sheet “TRADE RECOMMENDATION LOG” will be self-explanatory. Also in this sheet Trade recommendations which are still active are marked.
When signals are triggered mid-week, that is updated in log sheet and covered in the weekend report , due to paucity of time.
MARKET & NIFTY OVERVIEW
Nifty: LAST CLOSE – 15722.20. System gave long signal in on 07.05.21 at 14823.15. Continue holding long position. As of now there is an absolute profit of 6.06%. Trade recommended last week to go long for short term traders resulted in stop loss getting triggered on 29.06.21 at 15748.45.
Target 1 – 15350.0 (Achieved), Target 2 – 15535.0 (Achieved), Target 3 – 15834 (Achieved), Target 4 – 16050 Leverage 1.0x
Minimum profit potential – 3.5% (Achieved). Asset allocation profit potential – 3.5% (Achieved).
Minor trend: Neutral, Intermediate trend – Up, Long term trend – Up.
GOLD: Recommended to go on 26.06.21 at 46921.0 , with a stop loss at 47378.0. System exit triggered on 01.07.21 at 47031.0 resulting in absolute loss of 0.25%. As of now system is indicating that it might test moving averages and probably renewed short signal might come at slightly higher levels. Trade recommendation closed.
EXISTING TRADE RECOMMENDATION OVERVIEW
1. BAJAJ AUTO: LAST CLOSE – 4175.35. System gave a buy signal on 07.05.21 at 3856.75 with stop loss at 3794.0 and presently at an absolute profit of 8.26%. Target 1 was achieved on 27.05.21. Positional traders can continue to hold long position.
Target 1 : 4231.0 (Achieved), Target 2 – 4425.0, Target 3 – 4400.0, Target 4 – 4950.0
Minimum profit potential – 9.7% (Achieved). Asset allocation profit potential – 1.5%.
Minor trend: Up, Intermediate trend – Neutral, Long term trend – Up.
2. BPCL: System gave a buy signal on 07.05.21 at 443.15 with stop loss at 424.15.. Target 1 was achieved on 27.05.21. Profit protection stop was triggered at 467.15 on 28.06.21 resulting in an absolute profit of 5.42%. Trade recommendation closed.
3. DLF: Recommended to go long around 270.0 levels on 23.05.21 with stop loss at 250.0 Target 1 was achieved on 08.06.21. Profit protection stop was triggered at 283.85 on 02.07.21 resulting in an absolute profit of 5.13%. Trade recommendation closed.
4. LIC HSG. FIN: Recommended to go long at 456.05 on 23.05.21 with stop loss at 420.0. Target 1 has been achieved on 04.06.21. Profit protection stop was triggered at 473.25 on 29.06.21 resulting in an absolute profit of 3.77%. Trade recommendation closed.
6. L&T: LAST CLOSE – 1485.65. Recommended to go long at 1418.05 on 23.05.21 with stop loss at 1368.20 and presently at an absolute profit of 4.64 %. Target 1 has been achieved on 04.06.21 but continue to hold long position, with profit protection stop at 1482.0.
Target1 – 1521.10 (Achieved), Target 2 – 1605.0, Leverage 0.15x.
Minimum profit potential – 7.3%. Asset allocation profit potential – 1.10%.
Minor trend: Up, Intermediate trend – Up, Long term trend – Up.
7. TATA MOTORS: LAST CLOSE – 344.9. Recommended to go at 313.10 on 30.05.21 with stop loss at 285.0 and at presently an absolute profit of 10.16%. Continue to hold long position.
Target1 – 370.0, Target 2 – 424.0, Leverage 0.20x.
Minimum profit potential – 18.2%. Asset allocation profit potential – 3.6%.
Minor trend: Neutral, Intermediate trend – Neutral, Long term trend – Up.
8. RELIANCE INDUSTRIES: Recommended to go long at 2094.80 on 30.05.21 with stop loss at 1990.0. Target 1 was achieved on 03.06.21 but I had recommended to continue to holding long position. System exit triggered on 02.07.21 at 2129.05. Trade recommendation closed.
9. INDIAN HOTELS: LAST CLOSE – 142.85. Recommended to go long at 147.45 on 27.06.21 with stop loss at 131.35 and presently an absolute loss of 3.12%. Continue to hold long position.
Target1 – 179.0, Target 2 – NA, Leverage 0.05x.
Minimum profit potential – 21.4%. Asset allocation profit potential – 1.1%.
Minor trend: Up , Intermediate trend – Up, Long term trend – Up.
10. ACTION CONSTRUCTION EQUIPMENT: LAST CLOSE – 232.9. Recommended to go long at 222.30 on 27.06.21 with stop loss at 198.25 and presently an absolute profit of 4.77%. Continue to hold long position.
Target1 – 300.0, Target 2 – NA, Leverage 0.10x.
Minimum profit potential – 35.0%. Asset allocation profit potential – 3.5%.
Minor trend: Up , Intermediate trend – Up, Long term trend – Up.
11. BRITTANIA INDUSTRIES: LAST CLOSE- 3689.10. Recommended to go long at 3670.05 on 27.06.21 with stop loss at 3510.45 and presently an absolute loss of 3.40%. Continue to hold long position.
Target1 – 3893.45, Target 2 – 4201.0, Leverage 0.15x.
Minimum profit potential – 6.1%. Asset allocation profit potential – 0.9%.
Minor trend: Down, Intermediate trend – Up, Long term trend – Up.
12. HDFC BANK: LAST CLOSE- 1480.40. Recommended to go long at 1515.50 on 27.06.21 with stop loss at 1478.50 and presently an absolute loss of 2.29%. There might be an exit this week but has to be confirmed based on system signal. Continue to hold long position.
Target1 – 1561.63, Target 2 – NA, Leverage 0.20x.
Minimum profit potential – 3.3%. Asset allocation profit potential – 0.7%.
Minor trend: Neutral, Intermediate trend – Up, Long term trend – Up.
NEW TRADE RECOMMENDATION
This section will be updated during the week since no clear signals have emerged.
NO NEW RECOMMENDATIONS UNDER THIS SECTION FOR NOW.
TOTAL LEVERAGE OF ABOVE NEW TRADE RECOMMENDATIONS: NA
COMBINED PROFIT POTENTIAL FOR ABOVE TRADES: NA
TIME WINDOW OF TRADES: 7 DAYS TO 60 DAYS.
TOTAL LEVERAGE INCLUDING UNCLOSED POSITIONS AS PER PREVIOUS RECOMMENDATION: 2.0
RETURNS TILL DATE SINCE 04.07.20 : 36.73%
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