Dec 13, 2013

Importance of Support and Resistance in Trading

Support and Resistance are very important to a Technical Analyst or a Trader when planning for a trade.You,as a trader or technical analyst,should never undermine the significance of these two aspects of the trading plan and you should be very clear of these two levels before you enter a trade.Support and Resistance are your entry and exit levels for a long trade and vice versa for short trade.Moreover,prior knowledge of Support and Resistance brings much needed discipline in trading which is an important step for you to become a successful trader.

Dec 11, 2013

How to do News Trading ?

News Trading is a strategy of trading by taking position,long or short, in securities ahead of any big news which is so significant that it may lead to massive wild moves in that security and closing the position after the news has been released.Though you may trade in any security for news trading but the most popular securities are the Currency Trading and Stock Trading.News can be of any type like Monetary Policy announcement,quarterly results for any stock,inflation data,IIP data or GDP figures or any stimulus or Jobs data

Dec 8, 2013

Outlook for NIFTY for the coming trading sessions

In our previous post on Nifty Outlook,we expected Nifty to move towards 6220 and 6300.Nifty,after slipping towards 6150 levels,came back strongly and tested 6300 after crossing 6220,finally closing around 6260 level for the week.

Nifty Daily Chart
[source : www.icicidirect.com]
Nifty is continuing with its bullish trend.In the process,it again broke out of a bullish triangle at 6230
on a daily chart.This pattern gives much higher target for Nifty in the coming days.
Though  leading indicator Slow Stochastic is showing negative crossover indicating overbought market,market is expected to continue the strong momentum it gained
after taking cues from Exit Polls of 5 state elections

Dec 7, 2013

Define your Risk Profile before Stock Trading

Know your Risk profile
Stock markets,though have the potential to produce greater returns than other asset classes,are associated with high risk.Infact, higher the risk higher is the return or vice-versa.So it becomes imperative to understand that you know the risk before entering the markets. Every individual has his own risk taking capacity or Risk Profile when it comes to his trading or investment decisions.So what are the factors that define your Risk Profile?

Dec 6, 2013

Equity Linked Savings Scheme (ELSS)-A Tax Saving & Investment Option

As the financial year nears its end,every individual or invester starts looking for tax saving instruments which should yield handsome returns along with primary requirement of saving tax.There are several
options available in the market which are commonly used by people like Public
Provident Fund (PPF),National Savings Certificate (NSC) or Unit Linked Insurance Plans (ULIP).Although, these are quite popular

Dec 1, 2013

Outlook for NIFTY for the coming trading sessions


In our last post on Nifty outlook,we expected downside targets of 5975 and 5900 for Nifty.Nifty however staged sharp pullback on the back of considerable short covering and closed at 6177 for the week.

Nifty-Triangle Pattern Breakout
On daily chart,Nifty has given breakout (blue circle) above a Triangle chart pattern which is a bullish sign for Nifty in the short-term period.

Nov 29, 2013

Equity Systematic Investment Plan ( ESIP ) - Intelligent way of stock accumulation

Systematic Investment Plan ( SIP ) remained very popular and successful method of investment in Mutual Funds for long term investors.Taking inspiration from SIP, the leading stock brokers have started providing similar option to investors for stock accumulation.This is known as Equity Systematic Plan ( ESIP ) or Systematic Equity Plan ( SEP ).
Equity Systematic Investment Plan ( ESIP )

We all know it is always risky to invest in stock market.An investor willing to buy stocks wants to enter in the stock at a fair price so as to minimize his risk and maximize the returns

How to be a Successful Trader in Stock Market

Trading in Stock Market is a highly rewarding business.Lot of people start trading ,thinking of making quick money but end up loosing.It is a fact that 80 % traders loose money,only 20 % make it big when it comes to stock markets.My purpose of writing this is not to dishearten or discourage you of trading.There are certain basic things about trading which if followed strictly may help you to shift into the category of 20 % lucky people.
   
You should always remember that these 20 % folks are not any extraordinary people.

Nov 24, 2013

Outlook for NIFTY for the coming trading sessions

In our last post on NIFTY outlook,we expected Nifty to move higher towards 6150 and 6200 for retracement of 50-62% of the 350 point decline on the back of short covering.Nifty did that and went above 6200 but could not sustain there.Fed tapering news provided the excuse for the profit booking and Nifty fell towards 5975

Nov 23, 2013

Understanding the CANDLESTICKS in a candlestick chart


Candlestick charts make an extremely important part in the arsenal of a technical analyst.Although there are other types of charts also available like line,mountain and OHLC charts but the information Candlestick charts provide about a security earns them a special place in the technical analysis arena.


Candlestick charts originated in Japan,hence popularly called as Japanese Candlestick Charts.

Nov 16, 2013

Outlook for NIFTY for the coming trading sessions


Nifty Daily Chart-Retracement lines
In our last post on NIFTY outlook,we mentioned targets of 6040 and 5980 on the lower side.Continuing the downtrend,Nifty fell in 8 sessions on the trot.Breaching the first support of 6040,Nifty went up to 5975,the next major support.From these levels ,Nifty bounced back and closed above 6050 in the last trading session supported by short covering.

Nov 10, 2013

Yes Bank-A very short-term selling opportunity

Yes Bank-Daily Chart
source: www.icicidirect.com
During the last few days,markets has seen profit booking after the steep rise.The fall is lead mainly by the banking index.Several banking heavyweights have broken the important support levels in this fall and are offering shorting opportunities.

Yes Bank is also one such stock which has broken down from the Wedge pattern in last trading session

Outlook for NIFTY for the coming trading sessions

Nifty Daily Chart
( source : icicidirect.com )
In our last post on Nifty Outlook, we expected targets of 6350 and 6400 for NIFTY on the basis of strong upward momentum in the market backed by strong FII's flows.Nifty,however,after testing 6300 odd levels faced profit booking and was dragged down towards lower support levels and closed at 6140 on weekly basis.

On the daily chart,Nifty breached and closed below the neckline ( yellow line ) of the Inverse Head & Shoulder Pattern

Nov 9, 2013

Systematic Investment Plan ( SIP )

Almost everyone of us has some goal or ambition in our life which we plan to achieve,for some it can be buying a house or a car at some point of time in future,for others it can be children's education or marriage or their own retirement planning or financial independence.All these goals require huge sums of money to be take care of.

Now,everyone has goals but unfortunately very few of us are aware of the tools available to achieve these goals.To accomplish these goals requires very careful planning and discipline

Nov 5, 2013

Outlook for NIFTY for the coming trading sessions

Nifty Daily Chart
(source:www.icicidirect.com )
Nifty is continuing its uptrend on the back of strong up move in large cap heavyweights after breakout above the neckline of the Inverse Head & Shoulder Pattern and continuously trading above the neckline.FII's are on continuous buying spree.

Oct 31, 2013

Options Trading –What are Options?

Options constitute a lucrative trading tool in the stock markets..Many people are unaware of the options although they may have used them in someway or other at some point of their life..When talking of Options in stock markets,they cause a lot of confusion especially to newbies ; what is an Option and how it works.

Oct 29, 2013

Axis Bank ready for a bull run

Axis Bank-Inverse H&S Pattern
source:www.icicidirect.com
We saw in last few days and also discussed in our post on Nifty Outlook that Nifty has already entered into new bullish zone after trading for several years in 5000-6000 range and now it is heading towards target of 7000-7100 in the coming months.

Banking stocks remained under pressure for quite some time due to adverse micro and macroeconomic factors but now the tide is turning

Oct 27, 2013

Outlook for NIFTY for the coming trading sessions

Nifty Daily Chart
 ( source : www.icicidirect.com )
In our last post,we talked of target of 6230 and 6345 for Nifty.Nifty moved up to 6250 and retraced back due to profit booking ahead announcement of Credit Policy by RBI this week.RBI action shall decide the further movement for the nifty.

Oct 24, 2013

Technical Analysis

Technical analysis is a tool of significance importance for traders in stock markets.It helps to identify the entry and exit prices for a trade in a security,be it a stock or index.It is based on the principle of 'History repeats itself ' and ' security price discounts everything '

Oct 20, 2013

Outlook for NIFTY for the coming trading sessions

Nifty Daily Chart ( source:www.icicidirect.com )
In our last,post we talked of targets 6140 and 6220 for Nifty.In the week,Nifty after slipping towards 6050-6040 levels, staged a strong up move and continuing its uptrend closed at 6189 after touching 6200 level.
Nifty has given a breakout above the neckline of the Inverse Head and Shoulders Pattern with good volumes.

Oct 15, 2013

Inverse Head & Shoulder Pattern - How to Recognise and Trade It

Have you ever identified an Inverse Head & Shoulder Pattern on a chart and traded it accordingly? Let’s see what it is all about.The significance of this pattern for a trader lies in giving a confirmation of trend reversal for a security and the potential return it is able to generate if traded properly.
Head and Shoulder Pattern
Inverse Head & Shoulder pattern when formed shows that the previous trend of the security is coming to an end and a bullish trend is about to start.
On breakout of the pattern,traders need to be positioned on the long side to catch the big upmove that the security may give.

Oct 13, 2013

Outlook for NIFTY for the coming trading sessions

In our previous post,Nifty upmove was anticipated towards 6040 or higher and resistance near 6100 level.On Monday Nifty declined towards 5820 and took support there.Continuing with positive momentum,Nifty crossed 6040 and after touching 6107,closed tad below 6100 at 6096.
CaptureNF
Fig 1-Nifty chart
CaptureNF2
    Fig 2-TRIX & Momentum
                                                              
On daily chart,Nifty is in the process of making an Inverse Head and Shoulder Pattern,a trend reversal bullish pattern,the neckline ( orange trendline ) for which coincides with 6160-6170 (  Fig 1 ).If it manages to close and trade above that level with good volumes,it will open higher levels up to 7000 for nifty in future.
On last trading day,Nifty formed a Hammer candlestick on daily chart indicating some resistance at higher level of 6100. With FII's support and positive global markets,nifty is expected to keep maintaining positive trend.In Friday's session , FII's bought index futures worth Rs. 1000 crore and sold index options worth Rs.360 crore.On Nifty chart, TRIX ( Triple Moving Average Crossover ) has turned positive ( middle graph in Fig 2 ) and Momentum is already strong ( lower graph in Fig 2 )
For the coming days,Buy on dips strategy can be adopted .Nifty can be bought on dips towards 6050 and 5970 for higher targets of 6140 and 6220. ( spot levels )  

Oct 9, 2013

Heromotocorp breaking out of a bullish triangle pattern


          Heromotocorp is continuing with its uptrend,though it was stuck in a trading range for the past few days.In today's trading session , it attempted to break out of this range with good volumes.This trading range led to the formation of  a bullish triangle pattern on daily chart.

 On lower side, the stock is consistently taking support on the trendline supported by some short-covering.Short-covering is likely to continue in coming days also.In today's session again , it took support at the trendline after opening lower and gained strength throughout the day and managed to close above the upper trendline ( see black oval on chart )

         Technical oscillators like RSI ,slow stochastic s are already in buy mode and momentum oscillator is also in positive territory.
          Seeing all the scenario, Heromotocorp is expected to continue this uptrend in coming days. An upside of 8-10% can not be ruled out in a week or so. So the stock can be bought at the current market price or on decline towards 2000-2010 for the target of Rs 2232 as suggested by the triangle pattern.Stoploss for the trade can be placed safely around 1980-1990 ( spot levels ).
       
          

Oct 6, 2013

How to be a millionaire by investing in stock market

Investing in stock market is a major step towards wealth creation in one's life.Markets are always considered to be a better channel to achieve an individual's long term goals of creating corpus and to be a rich person.Almost everybody ,familiar to some extent to the financial markets , may have a perception that you put money in the markets and it multiplies several folds.This is because the common thinking is that you buy shares and sell shares and earn huge profits.This is true but the real test is when the time comes to apply this notion.Confusions start arising when you have prepared yourself to take equity exposure.

Oct 5, 2013

Outlook for NIFTY for the coming trading sessions

In previous post,we expected downside in Nifty with lower target of 5700 or lower.On monday,nifty started with slide which continued till next trading day and slipped to 5700 on tuesday.Highest put base is placed at 5700 which acted as a good support for the time being.Hence,nifty bounced back and moved towards 5950 before closing just above 5900 for the week.
For the coming trading sessions , nifty is likely to face stiff resistance around its previous resistance area of 5940-5970.The bias or the undertone in the index is positive with supportive FII;s data.In fridays session, FII's bought index futures to the tune of Rs 318 crore with sell figure of Rs 44 crore in stock futures.
On charts,nifty is well above 20 day moving average ( green line ) and 200 day moving average ( orange line ) which are expected to provide support on lower levels for the short-term.Momentum oscillators are in positive territory.Stochastics and RSI are also in buy mode.
Seeing the market momentum and global market scenario,markets are likely to trade positively and if crosses 5970 decisively,it can move towards 6040 or higher.Highest call base has also shifted from 6000 to 6100 which will pose stiff resistance at higher levels.

Oct 2, 2013

What is a Trendline and its significance

We always come to know of Trendline whenever we talk about technical analysis of any stock or an Index itself in the stock market.Knowledge of a trendline is an essential step for understanding and using the technical analysis for trading by the traders in the stock markets.Here,we shall be studying about it how to use it.
y
Fig 1 (courtesy-www.moneycontrol.com)
By definition,Trendline is a line drawn on a chart of a security(stock,commodity,currency etc) or Index by joining the upper or lower price points.Trendline depicts the trend of the security and helps to predict the future price movements.

Intraday Trading-Formulas and Rules

Intraday Trading is an alluring idea for traders to make quick money in stock markets. After all,who would not be interested in making some quick bucks in a matter of minutes or hours.So,it is quiet popular in a section of traders.Intraday trading or day trading, as the name is explanatory,is the process of taking long or short position in markets and squaring off ( exiting)  that position before the close of the market on the same day.Intraday traders take the advantage of the movement in the price of the stock or the index during the trading session.Movement can be small or significant.

Sep 28, 2013

Outlook for NIFTY for the coming Trading Sessions

For the previous week, Nifty continued to face resistance in 5900-5950 band on the upside.As you can see in fig 1, the upper trend line joining previous highs made by the Nifty gives resistance levels around 5920-5930 for the coming days.

Fig 1

Sep 25, 2013

Reliance Industries breaks down from Rising Wedge pattern

     Reliance Industries ( source : www.icicidirect.com )
Reliance Industries was trading in a range between 850-900 for the past several days.In yesterday's trading session it broke down from the lower trend line of a rising wedge with good volumes,confirming the bearish Rising Wedge pattern.Technical indicators and oscillators like momentum,stochastics and TRIX ( triple moving average crossovers) have turned to sell mode.
So,we can short Reliance Industries stock on bounce towards 870-875 or at current market price for target of 810-815.Stoploss for the trade is 900 and duration is 7-8 trading sessions.(All are cash levels).

Trading an Arbitrage and Reverse Arbitrage Strategy

There are two categories of traders in the stock markets.
1. Speculative :- These are the traders who simply speculate about the future price movments of a stock or the index based on their analysis , usually charts based technical analysis.Speculation can be for the increase or decrease of the future price.So positions are taken in the market accordingly, long position ( buy)  or short position ( sell)
2. Arbitragers:- These are the traders who take advantage of the price difference between the future and cash price of the same underlying.
Now what is Arbitrage and Reverse Arbitrage Strategy?
Arbitrage Strategy is technique of taking advantage of difference in the prices of Futures value and the Cash value of the same stock.You may have observed that the Futures price is usually greater than the cash price of the stock when the stock is in an uptrend.When Futures price is higher than cash price,it is called Futures are at Premium.Sometimes,the difference between these values is significantly higher which is beneficial to the arbitragers.

  Let's take an example. Assume, for any month's Futures contract,the Future price of say Infosys stock is trading at Rs 2160 and the cash price is trading at Rs 2000.Lot size for the contract is 125.Now what an arbitrager will do that he/she shall buy 125 shares of the stock in cash and simultaneously sell or short a futures contract.The logic behind the strategy is that on the expiry day of the Futures & Options contracts,the both prices will converge, that is both futures and cash prices start trading at same price.The trader will never go in loss.If stock price falls,the short position in Futures becomes profitable and if stock price rises then cash position turn profitable. So difference in Futures and cash price 2160-2000=160 has been locked and this is the profit ( 125*160=20000 ).
The point to be taken care of here is that the difference in the prices should be significant so that after excluding the transaction and commission charges for the trade, the return on the trade is appreciable ( 5-6% ).
Some modern trading softwares have inbuilt technique to identify the arbitrage opportunities.A vigilant trader can also spot the same with experience.
Reverse Arbitrage Strategy :- This is just the opposite of Arbitrage Strategy.Difference here is that you buy one lot of Futures contract and sell the same number of stocks from your demat holding.Here the Futures price is lower than the cash price.This is called Futures are at discount.
Arbitrage strategies are totally risk free source of making money in the stock market unlike speculative trading.

Sep 19, 2013

Follow-up for short-term call-MARUTI SUZUKI

Target of 1440 for the call initiated on Maruti Suzuki at 1310-1320 on September 12,2013 achieved today.
Full profits booked.

Sep 17, 2013

Wipro breaks out of trading range

Wipro Daily Chart ( source:www.icicidirect.com )
Wipro has been consolidating for the past several days in a range.During today's trading session,it gave break out of that range forming a pattern similar to a bullish Triangle pattern.
  The breakout took place with decent volumes.Daily Momentum Oscillators has turned positive.So long position can be initiated in Wipro at current market price of Rs 483 or on correction towards levels near 473-475.Target for this upmove can be up to Rs 540-545 with duration of 10-15 trading sessions.Stoploss for the trade can be placed safely just below 450.All levels shown are cash levels,so Futures Prices should be adjusted accordingly.

Sep 16, 2013

WPI inflation data leads to profit booking in markets

For the August month,WPI (Wholesale Price Index) inflation data came higher at 6.10% compared to 5.79% for the previous month.
   This led to some profit booking in markets as hopes of rate cut in RBI monetary policy on September 20 vanished.

Follow-up for short-term call-HCL TECH.

Stoploss triggered.

Sep 13, 2013

Short-term technical call-HCL TECH.

Buy HCL Tech around 1030-1040 for target of 1140 keeping stoploss at 995 in 6-8 trading sessions (spot levels).

Sep 12, 2013

Short-term technical call-Maruti Suzuki

Buy Maruti in the range of 1310-1320 for target of 1430-1440 in next 6-7 trading sessions.Stoploss 1290.(cash levels)

Sep 11, 2013

Follow up for technical call given on Punjab National Bank

Technical call for Punjab National Bank was given in Nifty outlook for targets of 485-490.Target achieved today and profit booked at 490.

Sep 10, 2013

Follow up of call given on September 3,2013

Target for Larsen & Toubro achieved.Profit booked at 805-810.Call initiated at 694.

Sep 6, 2013

Outlook for Nifty for the coming week

In the past week,nifty staged significant upmove on hopes from newly appointed RBI Governor Raghuram Rajan to uplift the sinking Indian economy and imminent diesel price hike to levels of 5650 after testing lows around 5330 on Syria concerns.
   Nifty has almost achieved the target which was placed around 5650-5680 after the breakout above 5510 levels on September 2, 2013 based mainly on a significant upmove in Bank Nifty from levels of 8700-8800 to 9600-9700 on the back of major movers like AXIS BANK,ICICI BANK,,INDUSIND BANK,YES BANK and PSU heavyweight STATE BANK OF INDIA.
   For the coming week, targets for Nifty being already accomplished and highest call base being present at 5700 call strike,nifty may face stiff resistance near those levels.Highest put base is placed at 5300 strike.Although short-term trend is up and momentum oscillators on positive,the possibility of sideways movement or a correction can not be ruled out.So traders need to be careful building heavy long postions after a 7-8% of move.
     Traders should wait for some correction before entering the markets.In banking space PUNJAB NATIONAL BANK (PNB) can be a good bet for the coming sessions as it has broken above trading range and has closed above those 444-445 levels.Targets could be around 485-490.

Follow up of calls given on 03-09-2013

Bank of baroda target achieved.Profit booked @ 510

Sep 3, 2013

Short-term technical calls on NSE(NIFTY)

Buy Larsen & Toubro at cmp of 694 with stoploss below 690 for targets of 800-810 in 7-8 sessions.(spot levels)

Sep 1, 2013

Short-term technical calls on NSE (Nifty)

1.Bank of baroda can be bought near 445-450 with a stoploss placed at 430 for targets up to 510-520 in 6-8 trading sessions
2. McDowell (united spirits) can be bought near 2120-2130 levels for targets of 2330-2350.stoploss should be at 2070.
3. Mahindra &  Mahindra can be shorted below 760 for targets of 720 with stoploss placed above 795.
Note-all prices are spot levels for the stocks with durations of 8-10 days.