TRADE RECOMMENDATION 28.03.21

From the desk of Capt.D.Ganesh Raja

Dear Friends,

I will discuss little bit about the performance of the Quant system based on which I have been writing this blog and giving trade recommendations. Before proceeding further let us have a look at the Nifty returns based on last Nifty close of 14507.50.

The Quant system till date has delivered 28.15% till date starting from 06.07.20 when I started writing this blog. This is underperformance compared to Buy & hold strategy in Nifty with a return of 35.40%. Also till date out of 37 trades, 21 trades have been profitable and 16 trades in loss, giving 43% accuracy. But if you look a little further , the buy and hold return of Nifty since 28.08.18 is 23.58% and since 12.03.15 is 65.30%. The annualized Nifty return since 12.03.15 is only 8.70%, a tad above Bank deposit rates.

The point in discussing all this ? When we have a secular bull or bear market this system will underperform the market. In the hindsight it is easier to say there was a secular bull or bear market but who knows beforehand of such an event happening.

75% of the time, The Dow Theory has beaten a Buy & Hold strategy within a 6 ½ year timeframe. Over 29 of the 36 ten year periods from 1953 through 1998, the Dow Theory strategy has beaten the buy and hold strategy.

Hence, in bad years, the Dow Theory outperformed on average buy and hold by 7.85%. True to its underperformance in good years, the Dow Theory managed to make only 9.28% in winning years, whereas buy and hold made 13.65%. Hence, in good years, the Dow Theory underperformed buy and hold by -4.08%. These figures based on US markets since I don’t have comparative figures here.

The idea behind developing a robust trading system is to give clear trading signals and also keep out of the market when the readings are not clear, so that reasonable returns can be generated in varying market conditions.

Due to the general hype in the media and over rating of buy & hold strategies, in addition to amplifying the pitfalls in trading, there is a distortion in the way we think. We are at a very nascent stage in this country as far alternative strategies are concerned.

In my last week’s report I had given the levels to short the market which materialized and people who had monitored those levels would have got the opportunity to short. Though the target of 14550 has been achieved there is indication of further fall after slight intraday bounce, which might give further opportunity to short. Time and work permitting I will try to update mid-week.

When a new trend emerges, it is always out of uncertainty and it is important to wait and enter the trade. Premature entries can teach hard lessons. Also there is a conundrum to solve whether to take profits or bet more. Do we know? Maybe…..lets watch.

Gold: Last close – 44695.0 (MCX PRICE). There is no change in my view on Gold from last week’s report. Short term traders continue to hold long position recommended on 21.03.21 at 44931.0 with stop loss at 44150.0. For long-term investors gradual accumulation has to continue.

Target 1 – 47237.0, Target 2 – To be updated , Leverage -0.2x.

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 – 14507.50. The shorting opportunity came on 23.09.21 at 14850 levels and presently target of 14550 has been achieved, giving an absolute profit of 2.8%. Continue to hold short position.

Conclusion: Short Nifty during bounce.

Target 1 – 14550 (Achieved), Target 2 – 14003.0 , Leverage -0.5x

EXISTING TRADE RECOMMENDATION OVERVIEW

1. SBI: Last close – 367.70. Recommended price – 382.90 to 385.0 to go short on 07.03.21, with stop loss 403.50. Presently on an absolute profit of 6.56%. Continue to hold short position.

Target 1 – 340 .0, Target 2 – NA, Leverage – 0.05x

Minimum profit potential – 11.37% , Asset allocation profit potential – 0.56%

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

2. DLF: Last close – 279.20. Recommended price – 311.0 to 307.0 to go short, with stop loss 324.0 on 14.03.21. Presently on an absolute profit of 9.50%. Continue to hold short position with profit protection stop at 288.30.

Target 1 – 293.0 (Achieved), Target 2 – 258.50, Leverage – 0.05x

Minor trend : Down, Intermediate trend : Neutral with downward tendency, Long term trend : Up.

3. HCL TECH: Last close – 958.55. Recommended price – 971.0 to 986.0 to go long, with stop loss 949.0. Presently on an absolute loss of 2.11%. Continue to hold long position.

Target 1 – 1055.95 , Target 2 – NA, Leverage – 0.10x

Minimum profit potential – 7.8% , Asset allocation profit potential – 0.78%

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

4. MARUTI SUZUKI: Last close – 6784.45. Recommended price – 7120.0 to 7180.0 to go short, with stop loss of 7380.0. Presently on an absolute profit of 4.71%. Continue to hold short position and increase leverage to further short at these levels.

Target 1 – 6845.0 (Achieved), Target 2 – 6693.0, Leverage – 0.20x

Minor trend : Down, Intermediate trend : Down , Long term trend : Neutral.

NEW TRADE RECOMMENDATION

1. TITAN: Last close – 1505.85. Recommended price – 1497.0 to 1510.0 to go long, with stop loss of 1432.0.

Target 1 – 1673.0, Target 2 –NA, Leverage – 0.10x

Minimum profit potential – 11.1% , Asset allocation profit potential – 1.11%

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

2. EICHER MOTORS: Last close – 2580.55. Recommended price – 2572.0 to 2587.0 to go short with stop loss of 2670.0.

Target1 – 2500.8, Target 2 – NA, Leverage 0.1x

Minimum profit potential – 3.7% , Asset allocation profit potential – 0.37%.

Minor trend: Down, Intermediate trend – Neutral with downward tendencies, Long term trend – Up.

TOTAL LEVERAGE OF ABOVE NEW TRADE RECOMMENDATIONS: 0.30

COMBINED PROFIT POTENTIAL FOR ABOVE TRADES: 1.6%

TIME WINDOW OF TRADES: 10 DAYS TO 30 DAYS

TOTAL LEVERAGE INCLUDING UNCLOSED POSITIONS AS PER PREVIOUS RECOMMENDATION: 1.3X

TRADE RECOMMENDATION LOG.pdf

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