Friday, April 23, 2010
On this day of 22nd April 2010, volatility ruled the roost in Indian stock markets. One must admit that it was a tough day in office for traders. What started off as a uninspiring and unsteady rise from day low, accelerated into a spectacular bull charge at around 11AM. And from 1.30PM to 2.30PM markets threatened to break free from day's high of 5332. But that was not to be. Quite contrary to expectations, markets tumbled suddenly and dramatically to retrace almost all the intra-day gains, catching most traders on the wrong foot.
If we analyze intra-day movement of Nifty, we find that Nifty rocketed from day low of 5221 to a high of 5332. This means that Nifty notched up an intra-day gain of 111 points from day low. But from day high it plummeted to 5246 in the last hour of trade, which means that Nifty lost 86 points from day high. At close Nifty managed to lift itself by 20 odd points, but the damage was already done. Bulls were caught on the wrong foot and there was no place to hide for many long-side-intra-day-traders.
Against the backdrop of circumstances just described, let us now evaluate the performance of intra-day trades in stock futures which were executed as per my recommendations. Today I had given two sell calls of stock futures during market hours. This was at a time when the market was reverberating with the sound of bulls all around. Many may think that as an act of bravado or even misplaced defiance. But before jumping to any conclusion, it will be my earnest appeal to thoroughly examine the performance of these sell calls:-
1. Siemens Apr Futures:- Recommendation was for selling one lot between 734/736 for target of 725 with stop loss at 738. The scrip made a day high of 735 and fell sharply to hit the target. The point to note here is that in a raging intra-day bull market, the high of the scrip was exactly within the recommended sell price range. It was a Rs 2/- range given for a scrip worth 730 plus and yet the scrip could not break free of this tight sell range. Moreover, notice the tight stop loss of just Rs 2/- above the recommended selling price.
Now for calculating profit, if we take the average of the recommended price range then our sell price works out as 735. This sell position met the given target at 725, thereby accruing a profit of Rs 10/- per share. Since the lot size is 752, total profit = 10x752 = 7520/-
2. India Infoline Apr Futures:-It was recommended to be sold between 117/118 for target of 115 and stop loss of 119. The scrip reached a high of 117.35 and then started falling. As the scrip fell, the target of 115 was met. If we take a careful look, here again the scrip could not break out of the recommended selling price range of 117-118. Even the stop loss given was only Re 1/- above the selling range.
For the purpose of calculating profit it is assumed that one could sell at 117.25 and then covered the position at given target of 115. Since the lot size is 2500, total profit = 2.25x2500 = 5625/-
Overall profit in intra-day trade from selling two stock futures = 7520+5625 = 13145/-
Tuesday, April 20, 2010
I have been busy connecting to a community of 15000 plus members who are into investing in stock markets in India. This community interacts at a platform hosted by http://www.stockezy.com/ which is fast becoming the leader in this novel concept of community investing.
As a social networking platform for investing in stock markets, Stockezy can also be termed loosely as Community Investing Fund, akin to Mutual Fund. The essential difference is that here every member is a Fund Manager controlling his own funds. The community aspect only helps each Fund Manager to tap intellectual resources of other members of the community, which in turn helps him in firming up his own mind before making any stock market investment.
As Stockezy grows in strength, the following announcement from the site reaches the length and breadth of India, echoing across various dailies and financial newspapers and periodicals:-
Social network to connect, educate & empower investors.Stockezy is an effective platform where investors help investors and work together to make informed financial decisions. Whether you are a seasoned trader or new to stocks; Stockezy is the place for you.
You may check out my contribution to http://www.stockezy.com/ , a pioneer site on social investing on internet, by following the links given below:-
Saturday, April 10, 2010
Indian markets have confounded most investors waiting for a deep correction to invest money for long term. The rally in Nifty that began on 06 Mar 2009 from a low of 2539 has been relentless in its intensity and reach. What initially seemed like a bear market rally has turned out to be a major Bull turnaround. Most retail investors have been left out of this stupendous rally and have been waiting ever since for a correction to invest for long term.
On 08 Nov 2009 when Nifty had closed in previous session at 4796, I had written a post titled Sensex And Nifty : Expected Movement Ahead. In that post I had mentioned that Nifty will reach the selling zone of 5320-5580 before a serious correction takes place, provided we receive positive Trans Atlantic Triggers (TAT). Having received positive TAT, on 15 Nov 2009 I again reiterated my point in a post titled Trans Atlantic Triggers - Did You Receive Those Signals? by concluding that "Nifty and Sensex should reach their respective selling zones before correcting" . At that point Nifty was trading at 4999 and from there marched on to reach a high of 5311 on 06 Jan 2010. After that Nifty corrected to a low of 4675 on 08 Feb 2010, a decent correction of 636 Nifty points.
The journey upwards from 4760 has now taken Nifty to a high of 5400 on 07 Apr 2010. Remember Nifty has again entered its selling zone of 5320-5580 and should witness correction any time within this selling zone. The headroom available from Nifty closing of 5362 on 09 Apr 2010 is only 200 odd Nifty points before any correction takes place.
Now the pertinent question that begs an answer is "How much will Nifty correct from its selling zone?". In other words, where will be the first support for any correction so that buying can be initiated? Well one can expect a support for Nifty in the region of 5050/5100. Hope you make the most out of trading with expected Nifty movement.