QUANT SYSTEM TRADE RECOMMENDATION - 29.08.21

From the desk of Capt.D.Ganesh Raja

Dear Friends,

The markets are continuing to rally and there seems to be no threat to the existing trend in weekly charts and as well as daily chart, though in daily charts there was a bit of a correction and I had posted an update to hold the existing positions. So, for now the target of 17152.0 seems achievable. Many people have this notion that trading means to keep on churning the positions, which need not be the case. If we have confidence in the trend, we can hold positions and if not need to book profits and look for a new stock or asset to trade. I think I have demonstrated sufficiently over the past year or so how during various stages of the market the position holding period has been varying. There is no fool proof way but only confidence based on observations and research spanning several years.

I do look at different factors and combine it in my Quant system so I thought of discussing one of the observations which is one of the factors for gauging future market direction, at least in intermediate timeframe.

As per the website eia.gov, July OPEC+ announced of heightened uncertainty in the COVID-19 outlook with rising cases of new viral variant have likely contributed to heightened uncertainty and volatility. In 1st quarter 2022 they estimate increased oil production in comparison to demand and hence lower crude prices. OPEC+ leaders are expected to reconvene in December 2021, when some adjustment for their current curtailment plan. In my opinion as seen in the past they would resort to production cuts to stabilize prices. As per their 18th July 2021 meeting the OPEC+ members announced that they had reached an agreement. They decided to ease production cuts by 400,000 barrels per day each month beginning from August 2021.

The above gives a comfort zone as far as India is concerned and crude oil prices have a direct bearing on inflation numbers, so we can breathe easy for now. Energy related stocks in India should gain due to this and one can pick and choose in this category. With inflation worries put to rest we might see a continuing strong rally in equities which can be further catalyzed by strong Q2 numbers.

Gold: Gold is still consolidating so no views for now.

Silver: No views for now.

Realty: No change in views since my last report. Personally over next several months I would be devoting time to research and invest in real estate and any of you do this work without needing an expert to tell us.

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 – 16705.20. System gave long signal in on 12.08.21 at 16364.05, with stop loss at 15834.00. Continue holding long position. As of now there is an absolute profit of 2.09%.

Target 1 – 16639.0 (Achieved), Target 2 – 17152.0, Leverage 1.0x

Minimum profit potential – 1.7% (Achieved). Asset allocation profit potential – 1.7% (Achieved).

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

EXISTING TRADE RECOMMENDATION OVERVIEW

This week I am not updating about all the trade recommendations made so far since it is covered in the “TRADE RECOMMENDATION SHEET”. Rather, I am only covering the ones which need attention, has given system exit or where profits might have to be taken.

1. L&T: LAST CLOSE – 1632.95. Recommended to go at 1596.0 on 29.07.21 with stop loss at 1560.0 and at presently an absolute profit of 2.31%. Continue to hold long position with revised stop loss of 1616.00, since some filters are not showing alignment with the uptrend. In the daily charts up move is seen when profits can be booked. MACD divergence is seen and that is the reason I am changing my view.

Target1 – 1675.00, Target 2 – NA, Leverage 0.20x.

Minimum profit potential – 4.9%. Asset allocation profit potential – 1.0%.

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

REST ALL RECOMMENDATIONS ARE VALID.

NEW TRADE RECOMMENDATION

1. BPCL: LAST CLOSE – 471.30. Recommend to go long at these levels with stop loss at 458.0. I have been observing this stock for quite a while and waiting for a buy signal to be triggered.

Target1 – 487.0, Target 2 – 505.0, Leverage 0.20x.

Minimum profit potential – 3.3%. Asset allocation profit potential – 0.7%.

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

2. BAJAJ FINANCE: LAST CLOSE- 6966.50. Recommend to go long at these levels with stop loss at 6836.20. You might be surprised as to why I am recommending at such a high level but there been a negation of a very strong downward indicator, so that gives a fillip to the upside in this stock.

Target1 – 7595.0, Target 2 – NA, Leverage 0.20x.

Minimum profit potential – 9.0%. Asset allocation profit potential – 1.8%.

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

TOTAL LEVERAGE OF ABOVE NEW TRADE RECOMMENDATIONS: 0.4x

COMBINED PROFIT POTENTIAL FOR ABOVE TRADES: 2.5

TIME WINDOW OF TRADES: 7 DAYS TO 60 DAYS.

TOTAL LEVERAGE INCLUDING UNCLOSED POSITIONS AS PER PREVIOUS RECOMMENDATION: 2.55

RETURNS TILL DATE SINCE 04.07.20 : 44.88%

TRADE RECOMMENDATION LOG.pdf

Download PDF • 583KB