QUANT SYSTEM TRADE RECOMMENDATION - 30.03.21
- Capt D. Ganesh Raja
- May 31, 2021
- 7 min read
From the desk of Capt.D.Ganesh Raja
Dear Friends,
I have been writing this blog basically to showcase the working of my Quant system as I have informed before and also to demonstrate to people to trade without fear. As of now the system has delivered a return of 37.12% in last 10 months since I have started this blog.
Before also I have demonstrated similar returns to many brokers and even fund managers showing similar kind of returns but there is always a reluctance to bet on something unknown even though the returns were there to be seen. They wanted to know the underlying methodology about system working, but this could not be done for two reasons:
i) It involves a line of study which is generally removed from that which in relevance.
ii) My refusal to explain underlying working of the system, though I had given the overall system attributes.
Probably going forward, we would see more acceptability.
Let us discuss markets now. Nifty last close of 15435.85 was a new weekly high close. Previous weekly closing high was on 12.02.21 at 15163. This current weekly closing is 1.8% higher than the previous closing high. Weather you have a system or no system, this is a clear buy when present closing is higher than previous closing, just to keep things simple.
For the uninitiated this might seem risky to enter market when it is making new highs but we are basing our decisions on system confirmations. Based on the daily chart there seems a further 100 odd points rally before there is some kind of consolidation or even slight dip to test the breakout levels, which is what we call “Traders’ remorse” in technical parlance. The are multiple indications that market trend will gather steam going forward, discussion of which is beyond the scope of this blog. Based on above observations it would be premature to close out long positions in Nifty as of now. There is a saying in the market that if there is a trend in the market then put a position and go fishing. Typically, in a situation like this there will be scores of stocks which would participate in the rally and where one can venture out to even midcap and small cap stocks with solid fundamentals. Due to time constraint, I am not recommending stocks from that space but I will still endeavour to do it.
I am not an expert in index composition but going by the focus areas of the present Government, going forward we might see rebalancing of sector weightages to reflect the actual economic activity areas. When it comes to valuing companies, all sectors are not equal. Markets assign premium valuations to sectors seen to have predictable earnings prospects and high shareholder returns such as FMCGs, IT and retail banks. Sectors with cyclical fortunes such as oil and gas, metals and mining and commodities usually trade at low PEs, even in good times. In my very first blog about post Corona market scenario, I had mentioned about the cyclicals making a strong comeback.
Now, thanks to active index management, the Nifty50’s sectoral composition tends to change quite drastically over time. This makes PE comparisons over time tricky. For example, when the index is overweight on cyclicals such as oil and gas, construction or metals, the Nifty PE may seem lower than when the index is dominated by FMCG, IT or financial services (which traditionally command a premium). Hence, taking cognizance of sectoral changes in the index is important before interpreting the Nifty PE as being expensive or cheap in relation to its past PE. Index weightage of cyclicals in quite low as of date.
So, people who are deciding market exposure based on historical PE ratios might be in for unpleasant surprise. Justifying irrational exuberance in the market also is a folly but the scenario is not that now.
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 – 15435.85. System gave long signal in on 07.05.21 at 14823.15. Continue holding long position as per detailed discussions above. As of now there is an absolute profit of 4.13%.
Target1 – 15350.0 (Achieved), Target 2 – 15535.0, Leverage 1.0x
Minimum profit potential – 3.5%. Asset allocation profit potential – 3.5%.
Minor trend: Up, Intermediate trend – Up, Long term trend – Up.
GOLD: LAST CLOSE – 49067.0. System gave long signal on 07.05.21 at 47751.0. with a stop loss at 46650.0. Presently at an absolute profit of 2.76%. Continue to hold long position in Gold, even though in shorter timeframe it might consolidate or dip a little.
Target1 – 49400.0, Target 2 – 50200.00, Leverage 0.3x
Minimum profit potential – 3.5%. Asset allocation profit potential – 1%.
Minor trend: Neutral, Intermediate trend – Up, Long term trend – Up.
SILVER: LAST CLOSE – 717500.0. System gave a buy signal in Silver on 05.05.21 at 67524.0 with stop loss at 67200.0 and presently at an absolute profit of 5.89%. This trade is positional and of a little longer timeframe so continue to hold long position in Silver, for the intermediate trend to play out.
Target1 – 76219.0, Target 2 – 79141.0, Leverage 0.2x
Minimum profit potential – 11.5%. Asset allocation profit potential – 2.3%.
Minor trend: Up, Intermediate trend – Up, Long term trend – Up.
EXISTING TRADE RECOMMENDATION OVERVIEW
1. BAJAJ AUTO: LAST CLOSE – 4203. 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 6.97%. Target 1 was achieved on 27.05.21 but continue to hold long position with profit protection stop at 4100.00.
Target 1 : 4231.0 (Achieved), Target 2 – 4425.0
Minimum profit potential – 9.7% (Achieved). Asset allocation profit potential – 1.5%.
Minor trend: Up, Intermediate trend – Up , Long term trend – Up.
2. BPCL: LAST CLOSE – 471.55. System gave a buy signal on 07.05.21 at 443.15 with stop loss at 424.15 and presently at an absolute profit of 4.04%. Target 1 was achieved on 27.05.21 but continue to hold long position.
Target1 – 480.0, Target 2 – 533.0, Leverage 0.15x.
Minimum profit potential – 8.3%. Asset allocation profit potential – 1.20%.
Minor trend: Up, Intermediate trend – Up, Long term trend – Up.
3. DLF: LAST CLOSE – 285.85. Recommended to go long around 270.0 levels on 23.05.21with stop loss at 250.0 and presently at an absolute profit of 5.80%. Continue to hold long position.
Target1 – 304.10, Target 2 – 323.35, Leverage 0.05x.
Minimum profit potential – 12.0%. Asset allocation profit potential – 1.5%.
Minor trend: Up, Intermediate trend – Neutral, Long term trend – Up.
4. HDFC LTD.: LAST CLOSE – 2543.00. Recommended to go long on 23.05.21 at 2518.85 with stop loss at 2440.10 and presently at an absolute profit of 0.96%. Continue to hold long position.
Target1 – 2595.0, Target 2 – NA, Leverage 0.15x.
Minimum profit potential – 3.0%. Asset allocation profit potential – 0.5%.
Minor trend: Up, Intermediate trend – Neutral with upward tendencies, Long
term trend – Neutral.
5. LIC HSG. FIN, LAST CLOSE – 455.95. Recommended to go at 456.05 on 23.05.21 with stop loss at 420.0 and almost at same levels from recommended price. Continue to hold long position. This is a positional trade with a slightly longer timeframe, hence be patient and let the trend development deliver returns, all going well. The indications are, it will easily surpass target 1.
Target1 – 500.10, Target 2 – 566.20, Leverage 0.10x.
Minimum profit potential – 9.6%. Asset allocation profit potential – 1.0%.
Minor trend: Up, Intermediate trend – Up, Long term trend – Up.
6. L&T: LAST CLOSE – 1478.10. Recommended to go at 1418.05 on 23.05.21 with stop loss at 1368.20 and presently at an absolute profit of 4.23%. Continue to hold long position.
Target1 – 1521.10, 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 – 319.80. Recommended to go at 313.10 with stop loss at 285.0 and at presently an absolute profit of 2.14%. 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: Up, Intermediate trend – Neutral with upward tendencies, Long term trend – Up.
NEW TRADE RECOMMENDATION
1. RELIANCE INDUSTRIES: LAST CLOSE – 2094.8. Recommended to go long at these levels or even better if price dips , with a stop loss at 1990.0.
Target1 – 2200.0, Target 2 – 2320.0, Leverage 0.20x.
Minimum profit potential – 5.0%. Asset allocation profit potential – 1.0%.
Minor trend: Up, Intermediate trend – Up, Long term trend – Neutral with upward tendencies.
2. KOTAK BANK.: LAST CLOSE – 1800.75. Recommended to go at these levels with stop loss at 1705.0
Target1 – 1982.0, Target 2 – 2120.0, Leverage 0.10x.
Minimum profit potential –10.1%. Asset allocation profit potential – 1.5%.
Minor trend: Up, Intermediate trend – Neutral with upward tendencies, Long
term trend – Neutral.
3. COAL INDIA: LAST CLOSE – 146.90. Recommended to go long at these levels with stop loss at 137.10
Target1 – 173.10, Target 2 – NA, Leverage 0.10x.
Minimum profit potential –17.8%. Asset allocation profit potential – 1.5%.
Minor trend: Neutral, Intermediate trend – Up, Long term trend – Up.
TOTAL LEVERAGE OF ABOVE NEW TRADE RECOMMENDATIONS: 0.40
COMBINED PROFIT POTENTIAL FOR ABOVE TRADES: 3.8%
TIME WINDOW OF TRADES: 7 DAYS TO 45 DAYS.
TOTAL LEVERAGE INCLUDING UNCLOSED POSITIONS AS PER PREVIOUS RECOMMENDATION: 2.85X
RETURNS TILL DATE SINCE 04.07.20 : 37.12%
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