QUANT SYSTEM TRADE RECOMMENDATION - 11.07.21
- Capt D. Ganesh Raja
- Jul 12, 2021
- 6 min read
From the desk of Capt.D.Ganesh Raja
Dear Friends,
Due to some Marine related assignments which have come up it has been a very busy week and going forward I might restrict recommendations to select indices / asset classes. This would depend on availability of time, however, I would endeavour to cover as much as possible. Also, if I have to board a ship for my assignment, I might not post the blog at all. I request all to keep checking the blog on regular basis so that you can read it as and when I post it.
Nifty has been moving in a tight band for the past few weeks and as per Technical Analysis parlance, it is generally recommended to buy at lower band and sell at the upper band. As I have said before one can capitalize on such trades if one can monitor markets on intraday basis and that too following a proper intraday system.
Now I will examine few more indicators before giving view on Nifty. Due to Intellectual Property issues, I am unable to disclose which Quant filters are used for different macroeconomic indicators. Those filters have been used based on past research.
The IHS Markit India Manufacturing PMI fell to 48.1 in June 2021 from 50.8 a month earlier. The latest reading pointed to the first contraction in the manufacturing sector since July last year. If I use unique filters which are part of the Quant system there are indications of further contraction before any uptick can be expected.
Inflation Expectations in India increased to 10.90 percent in May from 10.20 percent in March of 2021. Applying filters again some more up move is expected.
Coming to 10-year Government Security index, it has been moving in a well-defined weekly channel and presently turning down from upper channel line. This is a leading indicator as per intermarket analysis so with a lag of few weeks or so equity market might follow similar direction. Basically, this can be used as one of the decision-making tools.
Putting together all this, as of Friday closing of 15689.90, Nifty has given a buy exit and at same level sell signal, after having staying in buy zone since 07.05.21.
The important point to note is that it is in lower band of the trading range and hence strictly as per Technical analysis it should be a buy. In addition, narrow bands generally favour existing trend but contrary can also happen as in the case of Gold which we saw few weeks ago, so let us see how it pans out.
Gold: Gold is in “No trade zone” for now. I do not have enough confirmations for now.
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 repot:
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 – 15689.80. System gave long signal in Nifty on 07.05.21 at 14823.15. System exit triggered for the buy signal on 09.07.21 at 15689.8 resulting in an absolute profit of 5.85%. System simultaneously gave a sell signal on 09.07.21 at these levels Trade recommendation closed for buy signal and new trade recommendation is open for sell again. Short Nifty around these levels with stop loss at 15885.75.
Target 1: 15450.0, Target 2 – NA, Leverage – 0.5x
Minimum profit potential – 1.5%. Asset allocation profit potential – 0.8%.
Minor trend: Down, Intermediate trend – Neutral, Long term trend – Up.
EXISTING TRADE RECOMMENDATION OVERVIEW
1. BAJAJ AUTO: System gave a buy signal on 07.05.21 at 3856.75 with stop loss at 3794.0. System exit triggered on 08.07.21 at 4077.3 resulting in an absolute profit of 5.72%. Target 1 was achieved on 27.05.21. Trade recommendation closed.
Though target 1 was achieved I had recommended to continue holding position to achieve higher profit based on the system readings and subsequently the stock gave up on some of its profits and gave an exit signal. We could have taken higher profit at target 1, but there was no way to predict in advance that it might not achieve higher levels. This is how it goes. Based on price action, myriad filters automatically digest the information to present updated signal. We have seen this successfully demonstrated.
2. L&T: Recommended to go long at 1418.05 on 23.05.21 with stop loss at 1368.20. System exit triggered on 09.07.21 at 1499.6 resulting in an absolute profit of 5.75%. Trade recommendation closed.
3. TATA MOTORS: LAST CLOSE – 306.3. Recommended to go at 313.10 on 30.05.21 with stop loss at 285.0 and it had achieved an absolute profit of 13.69%. Presently it is at an absolute loss of 2.17%.
Company’s announcement about problems in procuring chips which might affect JLR sales worldwide brought the stock down. Such announcements or events which suddenly cause dramatic fall in stock prices happens once in a while. It can also cause sudden price spurts. I don’t have access to any insider information to know such things in advance and it is a futile attempt to catch market rumours and so-called privy information. This blog has demonstrated over period of one year that it is possible to stop worrying about such things and concentrate on the trading system.
The stop loss has not been triggered and there is a bounce which is expected, when traders can exit with a slight profit. For long term positional traders or portfolio investors can continue to hold this stock for multi bagger gains over next few years. The basis on which I make such a recommendation is beyond the scope of this blog. Continue to hold long position for now.
Target1 – 328.0 (Revised downwards), Target 2 – NA, Leverage 0.20x.
Minimum profit potential – NA. Asset allocation profit potential – NA.
Minor trend: Down, Intermediate trend – Down, Long term trend – Up.
4. INDIAN HOTELS: LAST CLOSE – 147.90. Recommended to go long at 147.45 on 27.06.21 with stop loss at 131.35 and presently an absolute loss of 0.31%. 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.
5. ACTION CONSTRUCTION EQUIPMENT: LAST CLOSE – 226.2. Recommended to go long at 222.30 on 27.06.21 with stop loss at 198.25 and presently an absolute profit of 1.75%. 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: Neutral, Intermediate trend – Up, Long term trend – Up.
6. BRITTANIA INDUSTRIES: Recommended to go long at 3670.05 on 27.06.21 with stop loss at 3510.45. Stop loss triggered on 08.07.21 resulting in an absolute loss of 4.87%. Trade recommendation closed.
12. HDFC BANK: Recommended to go long at 1515.50 on 27.06.21 with stop loss at 1478.50. System exit triggered on 09.07.21 at 1502.0 resulting in an absolute loss of 0.86%. Trade recommendation closed.
NEW TRADE RECOMMENDATION
Since more confirmation is required in individual stocks there are no recommendations to make.
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: 1.0
RETURNS TILL DATE SINCE 04.07.20 : 33.77%
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