QUANT SYSTEM TRADE RECOMMENDATION 23.08.2020 & NIFTY & MARKET OVERVIEW
- Capt D. Ganesh Raja
- Aug 24, 2020
- 4 min read
From the desk of Capt.D.Ganesh Raja
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.
MARKET & NIFTY OVERVIEW
Nifty Last close – 11408.40. As indicated in “MID WEEK TRADE REVIEW” dated 19.08.2020 Nifty has resolved itself shunning multiple downward bias indicators and moving up. India VIX which is a good indicator for the trend health is placed at 19.95 , seems will fall to 14-15 levels over next few weeks. VIX had been at a crucial level in past few weeks and I had been reluctant to give aggressive long side recommendations at those VIX levels, because past experience indicates market reversing from those levels. Hence aligning with other technical indicators short side recommendations had been given in a few stocks.
Uptrend is mature now, in existence since March 2010 lows and being overly optimistic beyond couple of weeks would be imprudent. As of now target zone of 11744 to 11870 in next couple of weeks and after that need to freshly review the situation.
Minor trend: Up, Intermediate trend: Up, Long term trend: Down with bottoming out Indications.
Examining individual sector indices there seems to be value buying in in following indices:
i) PSE Index: Last close – 1462.45. It has rallied from the lows of 1078.45 on 22.05.2020. There seems to be 15 to 20% upside in this index. To utilize this, one can take a look at Aditya Birla Sun Life PSU Equity fund to mirror these returns. Expense ratio has to be individually evaluated by the investor (NAV -9.12).
ii) Nifty Realty: Last close – 220.35. It has rallied from lows of 160.85 on 22.05.2020.
Also Mid cap indices seem to be exhibiting strong trend.
Keeping the above factors in mind the trade recommendations have been made in addition to various routine technical tools and proprietary indicators.
EXISTING TRADE RECOMMENDATION OVERVIEW
1. USD – INR: Last close – 74.90. Continue to hold short position in this currency pair with stop loss at 75.89. target 1 – 72.0
Target 2 – NA. Minimum profit potential – 3.79%. Leverage – 0.5x.
Minor trend: Up, Intermediate trend: Bottoming out indication , Long term trend: Down with bottoming out indications.
2. GOLD: Last close – 51960 (MCX PRICE). Recommended price- 48878. Gold is consolidating and is in accumulation band for people wanting to make fresh investment. It can fluctuate within few percentage for some more time.
Target 1- 55630.0 (achieved) Target 2 – 66875.0. Minimum profit potential – 13.81%. (Achieved) leverage – 0.3X. Gold is in a very strong long term trend and till there is any signs of long term reversals the long positions must be held by investors.
Minor trend: Consolidation. Intermediate trend: Up. Long term trend: Up
3. GRASIM: Last close – 664.85. Recommended price -636.55. Continue holding long position with stop loss of 617.00 in view of factors discussed in last week’s report.
Target 1 – 663.0 (Achieved) Target 2 – 690.0, Leverage – 0.20x
Minimum profit potential – 4.15% (Achived). There is a good probability of target 2 being achieved.
Minor trend : Up, Intermediate trend : Up, Long term trend : Down with bottoming out indications.
NEW TRADE RECOMMENDATIONS
1) COAL INDIA : Last close – 135.10. Go long around this price with stop loss at 129.10. The following factors indicate towards a long side trade:
i) After a prolonged multi month correction stock has formed a complex inverse Head & Shoulder pattern.
ii) Volume trend in line with the pattern.
iii) Bollinger band expansion seen in weekly charts.
iv) Proprietary indicators showing value zone for buying.
Target 1: 150.70 Target 2 – N.A. Leverage – 0.1x
Minimum profit potential - 11.55%
Minor trend : Verge of breakout, Intermediate trend : Neutral with bottoming out indication, Long term trend: Down with bottoming out indications.
2) L&T: Last close – 1009.10. Go long if price dips to 990-995 levels with stop loss at 970.0. The following factors favour a long side trade:
i) Stock has completed a prolonged 5 wave correction and showing first signs of recovery on weekly charts.
ii) The prolonged bottoming pattern since April 2020 seems to have resolved to the upside.
Minor trend : Verge of breakout, Intermediate trend : Neutral with bottoming out indication, Long term trend: Down with bottoming out indications.
Target 1: 1118.0 Target 2 – N..A Leverage- 0.1x.
Minimum profit potential – 12%.
3) INDIAN HOTELS : Last close – 96.75. Go long in the price zone 93-98 with stop loss at 85.0. The following factors favour a long side investment opportunity:
i) A cup and handle bottoming pattern after a steep fall in the stock witnessed since September 2019.
ii) Decisive breakout from a important resistance level at 95 on weekly basis.
iii) Prices are recovering from low and last seen in 2014.
iv) Value zone of buying as per proprietary indicators.
Minor trend : Breakout from resistance, Intermediate trend : Neutral with bottoming out indication, Long term trend: Down with bottoming out indications.
Target 1 : 122.50 Target 2 – N.A. Leverage – 0.05x
Minimum profit potential – 27%
4) BEML: Last Close – 714.80. Go long in price band of 690 to 720 with stop loss at 647.0. The following factors favour a long side trade:
i) Stock recovering from 6 year lows after steep fall since January 2020.
ii) Prolonged accumulation and value discovery price zone between 596 to 660.
iii) Prolonged bottom consolidation pattern since April 2020.
iv) Failure bullish swing in weekly W%R indicator.
v) Rising 26 week EMA.
Minor trend : Breakout from resistance, Intermediate trend : Neutral with bottoming out indication, Long term trend: Recovering from lows and first signs of upmove.
Target 1 : 823.0 Target 2 – N.A. Leverage – 0.05x.
Minimum profit potential – 15%
TOTAL LEVERAGE OF ABOVE NEW TRADE RECOMMENDATIONS: 0.25x
COMBINED PROFIT POTENTIAL FOR ABOVE TRADES: 3.45%
TIME WINDOW OF TRADES: 7 DAYS TO 30 DAYS
TOTAL LEVERAGE INCLUDING UN-CLOSED POSITIONS AS PER PREVIOUS RECOMMENDATION: 2.0X
PROFIT / LOSS TILL DATE BASED ON ALL TRADES BASED ON ASSET ALLOCATION: 8.09%
PERIOD IN WHICH ABOVE RESULT WAS ACHIEVED: 9 WEEKS
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