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.