QUANT SYSTEM TRADE RECOMMENDATION - 16.01.22

From the desk of Capt.D.Ganesh Raja

Dear Friends,

I got a break from ship visits in between the assignment, but I have been tested Covid positive, without any symptoms. During the isolation period I will try to share some thoughts and recommendations keeping a little longer timeframe in mind, since in my next project I would not even have access to my laptop or phone, as I would be working in a high security area.

The recommendations given during the last post was off the mark and stop loss was triggered in many. Once in a while market smack you in the back and let us take it in our stride. It is part of learning process and let us not be bothered too much with once in a while setback. Trading is also a long-term commitment, remember!

Macro factors doesn’t seem so encouraging from what we discussed last. Inflation expectations at 12.6%, as per last available data in November 2021, compared to 10.9% in December 2020. Food inflation is also above its long-term moving average, with possibilities for more upward swing. This I think would be managed prudently, given the approaching elections in many states. 10 year Government Security index continues to be in falling channel.

Industrial production in India increased 1.4 percent year-on-year in November of 2021, slowing from an upwardly revised 4 percent growth in October and missing market expectations of a 3 percent rise- Source Ministry of Statistics and Programme Implementation (MOSPI).

The positive factors have been strong GST collections of 13%increase in December 2021 compared to a year ago. This means economic recovery post second Covid wave is continuing. So, this gives a sense that central bank might be more benign with interest rate hikes, not to jeopardize a fledgling recovery. I might be wrong here but would rather go with my understanding of it and other factors in the Quant system.

The system after having given stop loss in Nifty hasn’t given an automatic buy signal, as of yet. Some of the sectors, indices which look promising as per the system readings are metal, IT, automobiles and infrastructure. I will not go too much into details, but will try my best to select the appropriate stocks based on these factors. Lengthy discussion is not appreciated by many who are still trying to learn the basics. Especially during my interaction with seafarers onboard during my recent ship visits, it is clear that they are looking for simple solutions and same is the case with many people ashore. There is also an indication that small cap index seems to have a better reward to risk from here onwards. Readers of this blog can check any of the well managed small cap funds to invest but for the purpose of this blog and records I will benchmark it with the Nifty Small cap 50, for the basis of recommendation.

I would recommend a 30 % exposure in the small cap space. The targets are keeping longer timeframe in mind, so one needs to be patient here. Also, a note of caution in this space is the sudden unexpected volatility. If one could devote time in identifying future multi baggers in this space it would be worth it but the research is also painstaking.

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.

NIFTY: Last close – 18255.75. We will wait for further confirmation before trading in Nifty. The short recommendations given on 13.12.21, stop loss was triggered on 04.01.22 at 17805.0 and the short recommendation given on 24.12.21, stop loss was triggered on 03.01.22 at 17387.15. Both recommendations resulted in a loss of 2.39% of the capital, based on asset allocation.

GOLD: Last close – 48119.0. Long recommendation in Gold was given on 22.10.21 at 47797.0 and on 13.12.21 at 48303.0. For now, exit the trade recommended on 13.12.21, with leverage 0.5x and continue to hold the trade recommended on 22.10.21. The strong rally which the filters were indicating did not materialise and it is continuing to consolidate.

EXISTING TRADE RECOMMENDATION OVERVIEW

REFER TO TRADE RECOMMENDATION LOG FOR TRADES WHICH WERE CLOSED.

1. HINDALCO INDS.: Last close – 506.35. Recommended to go long at 458.90 on 24.12.21 with a stop loss of 437.0, resulting absolute profit of 10.34%. Continue to hold position. Revised profit protection stop loss is 472.00.

Minor trend: Up, Intermediate trend – Neutral with upward bias., Long term trend – Up.

Target1 – 490.0, Target 2 – 585.0, Leverage 0.10x.

2. INFOSYS: Last close- 1929.35. Recommended to go long at 1963.5 on 24.12.21 with a stop loss of 1780.0, resulting in an absolute profit of 3.53%. Continue to hold position.

Target 1 – 2014.0. Target 2 – 2063.0, Leverage – 0.2x

Minor trend: Up, Intermediate trend – Up., Long term trend – Up.

NEW TRADE RECOMMENDATION

This section will be updated in the next few days, since some of the parameters haven’t been conclusively analyzed.

TOTAL LEVERAGE OF ABOVE NEW TRADE RECOMMENDATIONS: NA

COMBINED PROFIT POTENTIAL FOR ABOVE TRADES: NA

TIME WINDOW OF TRADES: 15 DAYS TO 90 DAYS.

TOTAL LEVERAGE INCLUDING UNCLOSED POSITIONS AS PER PREVIOUS RECOMMENDATION: 0.6X

RETURNS TILL DATE SINCE 04.07.20 : 58.84% (AS OF FRIDAY 14.01.22 CLOSING)

TRADE RECOMMENDATION LOG.pdf

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