Nifty [4997.05] opened 1% above its previous close yesterday and and was thrown back from the earlier upward sloping trendline (which now has acted as resistance level). I am not positive on Nifty and do not expect it go above 5054 next week. Would prefer to liquidate all short term positions (I consider short term as position which I would not want / prefer to hold over 2-3 months) now and re-enter market when I am more comfortable that bulls are ready for a move again.
We had mentioned in our October 13 blog that we would be seeing a Classic Class A Divergence which has materialized.
Where to now ? I fear the markets should go down by 100-200 points even if the same does not happen immediately. In the meanwhile the markets may make an effort to pull back to the trendline just broken. However, the market can get support at a point where 14day RSI meets the long term trendline. At that time, its movement may depend on global cues also.
I am therefore liquidating scrips mentioned above. Let me admit IFCI was a misconceived strategy. Well we all learn by mistakes. Gitanjali Gems, Reliance Industries and IDFC have good potential over time. Still I am disposing the same from our paper portfolio in sympathy with breaking of upward trendline.
Our portfolio now stands as follows -
A lot of our good work has gone for good behind two bad decisions – IFCI Options and RCOM. It happens. Options are very risky as a class of instruments if not used for hedging. RCOM could have been sold even after it showed the first big drop on 6th October. However, its too late now. We would now wait for a better exit opportunity, though it may take a long time. Nifty [5118.20] should move by another 1 – 1.5% before it hits major resistance zone. Our blog portfolio value now is Rs. 11.33 lakhs.
Nifty rebounded with strength from the trendline yesterday. This is a good sign for bulls. This bounce may be able to take Nifty to 5300 levels. However, this bounce should not be used for entering into long term positions. Investors should get better entry points later. I expect to see a classic Class A (3 points of which 2 points are already plotted as on date) Divergence where the prices reach newer heights while corresponding indicator is not able to break earlier highs. This would break the market badly when bears gain control. The bears can gain control due to bull tiredness or some adverse news. I don’t expect 14day RSI to break the downward sloping trendline.
However, this does not mean that we should not take advantage of the upmove. We shall therefore buy two scrips today – Reliance Capital and Mercator LInes. Note, our entire portfolio including scrips being added today may be very short term. We are now looking at a maximum 10% gain from here. We may quit our long positions before achieving that target also.
Reliance Capital [Rs. 950.60] chart is as follows -
Mercator Lines [Rs.65.10] chart is as follows -
Our blog portfolio is now as follows -
Our portfolio has hit a lean patch. Gitanjali Gems is crawling along its upward trendline but any sporadic sharp movement has met with selling pressure. Lets wait and see. I was quite positive on REI Agro. But it is a negative performer as on date. Does not make sense selling it now. It’s fundamental are strong and it should give us good exit opportunities sometime in future. As on date the market has downward re-rated telecom sector without giving any decent exit opportunity. Considering that Reliance Infratel issue would hit the market in a few months, RCOM investors should be able to get a decent exit opportunity. Reliance Industries (RIL) stock price is very near its upward trendline (just as Nifty also) and in case of a confirmed breakdown below the trendline (for Nifty, RIL and many others), things can get very serious. Aban Offshore too is just above its trendline. In case Nifty closes below 4920 tomorrow, it can mean a strong fall in the offing. This may also mean that all bulls including little ones like us may have to run for cover and book losses if it comes to that. In case the market goes up tomorrow, I think it would be an opportunities to us to exit long positions as soon as possible.
For an understanding of the risk which I am referring to now, please find Nifty chart below -
Our blog portfolio as on date is as follows -
Skumars Nationwide has broker medium term trendline which makes us liquidate this scrip.
Alok Industries looks very weak on charts and its support is way below its current price. Though the market showed very smart recovery, the same did not reflect in scrips price today. I therefore plan to liquidate the scrip today.
Our portfolio now stands at Rs. 11.45 lakhs today.
Today our blog portfolio got badly hit. From Friday’s blog portfolio value of Rs. 12.09 lakhs to Rs. 11.65 lakhs today, it has suffered a hit of 3.64% against Nifty fall of 1.58%. Though our blog portfolio has outperformed Nifty as on date, today’s hit signifies that some modifications would have to be made soon. Overall I am positive on markets though we need to be very cautious.
RCOM movement today has taken me by surprise, though I believe it should be a good opportunity to enter for medium term investors.
The markets may move up starting tomorrow or may take one or two more days to muster strength. I would prefer to take any further investment decision in blog porfolio after end of trading day tomorrow.
Our blog portfolio value stands today at Rs. 1,208,770 against an investment of Rs. 1,000,000 on 17th Aug, 2009. Though I have all the three stocks in our blog portfolio, I continue to remain quite positive on Aban, IDFC, RCOM.
Though, we have cash available, I do not propose to utilize the same for any fresh investment for Monday.
A lot of scrips have shown weakness today and the correction may continue for a couple of days. Bharati Shipyard [Rs. 205.80] has shown some temporary weakness on charts. I propose to dispose this scrip from my paper portfolio today so that I can buy some other scrip in next 1-2 days. I do not intend propose purchase of any security in our blog portfolio today.
Our blog portfolio has gone down to Rs. 11.72 lakhs today.
Nifty has not shown any major movement today. It failed to hold on to 5000 mark but I don’t think it matters much in the overall scheme of things.
I am not proposing any change in our paper portfolio today. It has shown increase to Rs. 12.03 lakhs today. However, in case I would have to buy any scrip today, I would have liked to buy Essar Oil. It has shown a long term price breakout on chart with heavy volumes.
Nifty is moving up as we would like it to. So I shall not cover it today. I propose to sell Dena Bank today from our paper portfolio. It has moved up sufficiently and so lets book some profit and get on with the game. As they say, nobody became a pauper booking profits (so what if it is only paper profits).
I do regret selling Ispat Industries just as I had regretted selling ICICI Bank from our paper portfolio. Ispat Industries has shown good movement today and the price action is pretty promising.
I would however like to invest in Aban Offshore again for our paper portfolio, though we had sold it earlier. The main reason is that it’s chart pattern is pretty encouraging and it is likely to substantial amount through a QIP pretty soon.
Our paper portfolio value is currently at Rs. 11.97 lakhs. We have completed one month of our paper portfolio. Absolute returns of 19.7% for the month. Certainly not bad ? Actually, too good. Lets continue the good work.
Nifty has shown strong positive movement again and I am definitely impressed. This is a market which allows scrip specific action peacefully. Thus, so long as you are able to identify a good stock, it would deliver good returns to you.
Dena Bank has moved up fast. Bank stocks are current favourites. So I do not want to change any scrip in our paper portfolio today. However, in case I had to include any scrip in paper portfolio today, I would have included Bombay Rayon Fashions. Reason ? Price breakout from with high volumes. 
Any case, our paper portfolio stands as follows today -
After showing smart gains in the first two weeks, you must have noticed that our paper portfolio like markets is going nowhere. It happens. In any case, we have around 11 months to show further gain of 9% on our paper portfolio which should be easily achievable. But even in this case, we need to be careful. After showing a good breakout, the market is thoroughly testing tenacity of both bulls and bears. Our paper portfolio is as follows today.
Lets review two scrips, Gitanjali Gems and REI Agro.
Gitanjali Gems has just taken support of upward slopping support trendline. We may need to quit this scrip, if it breaks the trendline.
14 day RSI of REI Agro has shown a strong positive divergence. The scrip has shown very good volumes on upmoves. I am positive on this scrip. Let’s see.
Nifty has been consolidating after the breakout above 4750. The sentiment is overall positive and many participants believe that banks and textiles should show good performance in this rally. I share their view. To that extent I regret that we sold out of ICICI Bank in our paper portfolio a few days ago. Anyway, in financial markets you have to learn to cope with regrets.
Ispat Industries has not been able to break above its previous high after showing a breakout (with volumes) from its downward sloping trendline of price as well as 14 day RSI. It is still above its trendline and as such we do not have any immediate reason to worry about its price movement. However, since we are running a paper portfolio, I propose to dispose it off (and book loss) and replace it with SKumars Nationwide. We shall revisit Ispat Industries again at a later date.
Our paper portfolio would be now as follows -
Nifty posted modest gains today. I do not see that as a cause of concern for bulls as FII’s money power is driving this rally.
Reliance Industries has shown classical breakout from down sloping trendline of highs as well as RSI. Lets buy Reliance in our paper portfolio.
Our paper portfolio now stands as follows -
Nifty seems to have finally broken the jinx. It has broken its resistance with increased volumes to close at 4782.90. Does not look like this would be a failed signal now.
Bank stocks showed good strength today. I like Dena Bank’s stock movement. It has broken both 14day RSI and price resistance trendline.
Our paper portfolio now would be as follows -
Nifty bounced smartly from its supporting trendline on Friday. Next few days are bound to be interesting.
IDFC along with Jaiprakash Associates would be join Nifty from October 20, 2009 in place of Nalco and Tata Comm. IDFC has shown a fresh 10 day high and RSI has shown marginal breakout. We may add IDFC for our paper portfolio.
Reliance Communications (RCOM) has shown upward breakout from its long term downward sloping trendline. Since Reliance Infratel in which RCOM holds around 95% stake would be coming out with an IPO in next few months, I think RCOM valuations have to be much higher. We will include RCOM in our paper portfolio.
Our paper portfolio is now as follows -
Nifty made valiant efforts to touch a point higher than yesterdays high of 4650.35. It failed too many times today. The only saving grace it had for the day was that its low for the day was higher than yesterdays low, which means today was an inside day for Nifty (which further means that the market is not sure of which way to go). A strong move on a day after inside days at any critical point can reflect the final change in direction.
Cards seems to be stacked in favour of bears for the time being. Shanghai Composite Index has shown a very strong move today. However, such moves generally need confirmation (i.e. markets have to test the strength of move by falling again to some extent).
I still remain uncertain on Nifty and therefore would not hazard any fresh purchases now.
Balaji Telefilms has given us decent returns in our paper portfolio and therefore I would like to book some profit (especially considering that I am not very bullish on Nifty). It may be noted that I am not suggesting this out of any technical indication for sell.
Our paper portfolio would now be as follows -
Nifty fell down marginally by 17 points to 4608.35 above the upward sloping trendline. Going by the FII cues, it seems Bears will have their way now for some time. If not tomorrow, then in very near future.
NMDC has broken its upward supporting trendline. I therefore feel obliged to sell it. Does not make sense hoping that it is a false bearish signal since the volume was too low. In any case, classical technical analysis does not consider volume as a strong indicator when downtrend is setting in. If it is there, it only reinforces the indication. The caveat to this paragraph is that I can still be proved wrong by market. But we have to do what appeals to us at the given point of time.
Since I am not sure of any upmove by market, I do not propose to add any scrip to our paper portfolio today. Our paper portfolio would now be as follows -
Posts
