TRADE RECOMMENDATION - 09.05.21

From the desk of Capt.D.Ganesh Raja

Dear Friends,

What I am going to say may come at a surprise to many since I have given a short recommendation in Nifty on 04.05.21 at 14675.0.

I did a careful Elliot wave count on Nifty weekly chart and surprisingly there seems to be a 5-wave count completed and a up move in formation which might go and retest the previous highs. How come such a quick turn of events you might ask but if any one of you have been practicing Elliot wave system would know that wave count depends on market action. On the contrary if the market had continued the downward movement last week it would have prompted me to take a different view. Also, the Nifty downtrend line with narrow body candle formations has been broken to the upside, in addition to two bar reversal signal in weekly chart which has further reaffirmed me to change the view.

Also couple of weeks ago I had informed that many indicators were showing a precipitous drop but that is not the case, again we give market action more importance and as of now those same indicators are showing a different picture.

A word of caution here is that market might go up for a few weeks but still a firm signal for long term commitment of investable funds has not yet come, which means that we still need to wait for that. Once the move is over, we might again look at a scenario where market might move down from those levels. We are not going to do guesswork here but follow the system indications.

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 – 14823.15. As of Friday closing Nifty has given system exit and given a buy signal with a stop loss of 14416.0 and all short positions got closed out. Once in a while this happens when signals gets reversed very quickly. I am not being too aggressive on the trade leverage because it can be judiciously used.

Target1 – 15350.0, Target 2 – NA, Leverage 1.0x

Minimum profit potential – 3.5%. Asset allocation profit potential – 3.5%.

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

USD / INR : Long position was recommended on 25.04.21 at 74.50 and system gave an exit on 03.05.21 at 74.34, resulting in a absolute loss of 0.21%. Please note that I haven’t taken into account levels where RBI supports the Indian currency because that is not one of the components of decision-making process in the system.

GOLD: Last close – 47751.0. Recommended to go long in Gold at these levels with a stop loss at 46650.0. This is only for short term traders but long-term investors in Gold should continue to hold their investment.

Target1 – 49400.0, Target 2 – 50200.00, Leverage 0.3x

Minimum profit potential – 3.5%. Asset allocation profit potential – 1%.

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

SILVER: Last close – 71429.0. Silver is resolving out of a long-term consolidation pattern in the form of a triangle on weekly chart, in formation since 07.08.20. If the breakout is successful the move upwards could be very quick. System signal in silver was given on 05.05.21 at 69046.0 with stop loss at 67348. Since due to paucity of time I mostly update this report during weekend, traders can still go long at last closing levels since we are trading a breakout.

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 – Neutral with upward bias, Long term trend – Up.

EXISTING TRADE RECOMMENDATION OVERVIEW

1. ADANI PORT: Recommended price to go short on 02.05.21 at 730.05 with stop loss at 760.0. Stop loss was hit on 03.05.21 with an absolute loss of 4.1%. Trade recommendation closed.

2. HDFC LTD.: Recommended price to go short on 02.05.21 at 2420.0 with stop loss at 2525.0. System exit was given on 06.05.21 at 2430.0 with an absolute loss of 0.41%. Trade recommendation closed.

3. DLF: Recommended price to go short on 25.04.21 at 252.0 with stop loss at 263.0. System exit was given on 07.05.21 at 257.85 with an absolute loss of 2.32%. Trade recommendation closed.

4. INFOSYS: Recommended price to go short on 02.05.21 at 1354.35 with stop loss at 1396.50. System exit was given on 06.05.21 at 1350.0 with an absolute profit of 0.32%. Trade recommendation closed.

5. HERO MOTOCOP: Recommended to go short on 02.05.21 at 2819.15 with stop loss at 2922.0. System exit was given on 06.05.21 at 2913.0 with an absolute loss of 3.13%. Trade recommendation closed.

NEW TRADE RECOMMENDATION

Trade recommendations in Nifty, Gold and Silver as given above.

1. BAJAJ AUTO: LAST CLOSE – 3856.75. Recommended to go long at these levels with stop loss at 3794.0.

Target1 – 4331.0, Target 2 – NA., Leverage 0.15x.

Minimum profit potential – 9.7%. Asset allocation profit potential – 1.5%.

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

2. BHARTI AIRTEL : LAST CLOSE – 568.50. Recommended to go long at these levels with stop loss at 542.0.

Target1 – 602.0, Target 2 – NA, Leverage 0.10x.

Minimum profit potential – 5.9%. Asset allocation profit potential – 0.9%.

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

3. KOTAK MAHINDRA: Last close – 1783.0. Recommended to go long at these levels with stop loss at 1721.0.

Target1 – 1968.20, Target 2 – NA, Leverage 0.10x.

Minimum profit potential – 10.4%. Asset allocation profit potential – 1.04%.

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

4. BPCL: Close – 443.15. Recommended to go long at these levels with stop loss at 424.15.

Target1 – 480.0, Target 2 – NA, Leverage 0.15x.

Minimum profit potential – 8.3%. Asset allocation profit potential – 1.20%.

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

5. HINDALCO: Close – 401.10. Recommended to go long if there are intraday dips till 390-395 levels . It is on a breakout so if at all there is a dip it might be very short. These sort of trades have to be monitored very closely but system has given a buy signal hence I am recommending.

Target1 – 480.0, Target 2 – NA, Leverage 0.15x.

Minimum profit potential – 8.3%. Asset allocation profit potential – 1.20%.

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

TOTAL LEVERAGE OF ABOVE NEW TRADE RECOMMENDATIONS: 2.15x

COMBINED PROFIT POTENTIAL FOR ABOVE TRADES: 13.1%

TIME WINDOW OF TRADES: 3 DAYS TO 30 DAYS.

TOTAL LEVERAGE INCLUDING UNCLOSED POSITIONS AS PER PREVIOUS RECOMMENDATION: 2.15X

We have had a drawdown in the returns based on the system because of the few stop losses and many system exits. The question arises if we can have returns only without any drawdowns, This is like someone asking if they can do business without any capital, no it is not possible. Drawdowns are inherent part of any system and we are show casing here the performance without any window dressing.