QUANT SYSTEM TRADE UPDATE & OVERVIEW - 08.05.23

From the desk of Capt.D.Ganesh Raja DATE: 08.05.23

DISCLAIMER

Please be informed that the author of this blog by Capt Ganesh Raja Dhanuskodi (Hereinafter called Capt Ganesh) is not a SEBI registered Research Analyst or Financial Advisor. Capt Ganesh writes this blog to express his views based of more than two decades of experience in capital markets and based on the Quant system which he has invented and he does not do this for “consideration” as per SEBI regulations, which means he does not receive economic benefit through it. Readers of this blog must seek advice from registered Investment Advisors / Research Analysts before taking any trading or investment decisions.

Capt Ganesh has been investing and trading actively since 2001, building trading models since 2013 and has invented an AI based intraday trading system, which has a pending patent approval.

Dear Friends,

The tremors of another potential bank failure in US, PacWest Bancorp after the stock dropped by 50%. The Bank Of England has also said that the UK households pulling money out of banking system, which indications that this crisis spreading to UK too.

The sage of Omaha, Warren Buffet, in his celebrated annual shareholder meeting, dubbed as “Wood stock of Capitalists” by some, has allayed fears of a widespread turmoil and praised the Government for the intervention in containing the crisis. He has been selling bank stocks since start of the pandemic and more recently in past six months. He has also said that the incredible period for the US economy might be coming to an end and asked shareholders to get used to lower earnings at Berkshire. Always good to hear when such great minds speak and once has to decipher underlying meanings by their own understanding.

A new poll by Gallup , a management consulting firm shows that nearly half of Americans say they are worried about safety of their deposits. Imagine a survey like this published about Indian banks and, hell would break loose in media.

In this world, seemingly unrelated events are somehow related and present themselves at the most inopportune moment. I look at diverse matters, both related and unrelated as to how it will affect my investments, well being of my family, society and country, in that order. CBOE volatility index had a sharp fall last week to 17.19 and seems headed to a lower level. US 10 year treasury yield is at 3.43% and for now seems to be headed lower.

Now let us turn our attention to our economy. RBI said, in its December 2022 statement, said that buoyant demand for bank credit and early signs of a revival in the investment cycle are benefiting from improved asset quality, return to profitability, and strong capital and liquidity buffers of scheduled commercial banks (SCBs). As per RBI's data, scheduled commercial banks' gross non-performing assets (GNPA) has dropped to a seven-year low, while net NPA has contracted to a decade low. Also, banks asset quality for the industrial sector improved. For NPAs it makes sense to view two quarters at least, so we will have a look at it by next month end. Gross non-performing assets (NPAs) of Indian banks are expected to fall to a decadal low of 4 per cent by the end of fiscal 2023-24 from a peak of 11.5 per cent in March 2018, helped by a sharp improvement in the corporate segment even though the stressed loans to MSMEs are projected to remain elevated, an industry study showed.

I have attached image of NPA chart in this blog for you all to have a look,

GST collection for April 2023 was at Rs 1,87,035 crores which was 12 % higher than same month last year. Export performance grew 17.33% to $641.0 billion during April-Jan 2022-23, compared to $547.0 billion last year.

This is the time to worry about monsoons in India which has a bearing on the rural economy. Skymet expects upcoming monsoon to be below normal , to the tune of 94% of the long term average. Indian Meteorological Department (IMD) has predicted something similar. However there is a probability of “El Nino”effect this year. IMD has said that there is a probability of 70% of El Nino in June, July, August and probability of 80% in July, August, September.

So looking at various factors it indicates that have to hold positions till evidence presents itself to act contrary.

I had already posted yesterday asking to hold all the positions. Please refer to TRADE RECOMMENDATION LOG for details. Tata Communications might give a system exit but there is no confirmation yet.

RETURNS TILL DATE SINCE 04.07.20 : 85.91% (AS OF THURSDAY 05.04.23 CLOSING)

TRADE RECOMMENDATION LOG.pdf

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