Category: Your Money

Weekly Recap

NIFTY.2012-10-01.2012-10-05

The NIFTY ended on a positive note, drifting up +0.87% for the week.
Biggest losers were LUPIN (-4.66%), BAJAJ-AUTO (-4.32%) and CIPLA (-4.17%).
And the biggest winners were JPASSOCIAT (+7.84%), AMBUJACEM (+7.08%) and BHEL (+6.86%).
Advancers lead decliners 30 vs 20
Gold: -1.04%, Banks: +0.64%. Infrastructure: -0.70%,
Net FII flows for the short week: $457.62 mm (Equity) and $193.11 mm (Debt)

The biggest data point that investors will ponder over the weekend is the US unemployment rate hitting 7.8% for September (8.1% previous).

Erroneous orders placed by Emkay sends Nifty crashing by 16%, to 4880.20 on Friday morning. Emkay has been temporarily barred from trading. Fat fingers indeed. (WSJ) [stockquote]EMKAY[/stockquote]

Daily news summaries are here.

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Sunder’s List

Overseas: Stoxx 50 -0.3%. London +0.03%. Germany -0.23%. France -0.14%. Dow +0.63% to 13579. S&P +0.79%. Crude +3.85% to $91.53.

Biggest opening of the India’s economy in a decade: FDI in retail, aviation, energy, insurance and pension industries, all in the span of a few weeks. Can the minority government push these through during the winter session of the parliament? Let the horse-trading begin! (Bloomberg)

OIL India and Indian Oil are busy buying oil and gas rights in Colorado. (SA) [stockquote]IOC[/stockquote] [stockquote]OIL[/stockquote]

The current rally in stock markets has got a lot of investors nervous: Marc Faber said investors should brace for a major market drop ahead that will present a buying opportunity. “I think that within the next six to nine months we can buy just about anything 20 percent lower than it is now.” (CNBC)

Now matter what your convictions are, use trailing stops!

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Trailing Stop Loss

Setting a stop loss can often times be an emotional decision. When you buy a stock, you expect it to go up; setting a stop loss at that point in time makes you play the devil’s advocate with yourself. Its not a nice feeling. However, setting a trailing stop loss, takes some of the pain away.

Quite simply, a trailing stop is not a fixed price at which you exit a loss making investment – it is a percentage below the most recent high set after you have made the buy.

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For example, lets assume that you bought a stock at Rs. 100. It then proceeds to move in this fashion:

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Watch how the trailing base, hugs the highs made by the stock after you bought it.

The stop loss is then triggered when the price falls x % below the trailing base.

In this example, if you set the trailing stop loss % as 5, the stop loss is triggered at point (7) highlighted in the chart.

 

The positives are many:

  • You will never let a profitable trade turn into a loss making one
  • It acts like a regular stop loss if the stock turns negative right after you buy it
  • You don’t have to reset your stop every time the stock makes a move

StockViz is proud to announce the availability of Trailing Stop Loss Alerts for our users. Start using them now!

Sunder’s List

Overseas: Dow +0.09% to 13495. S&P +0.38%. Crude -4.26% to $87.97. Stoxx 50 -0.1%, Germany +0.2%, France -0.3%, Italy +0.3%, Spain -0.6%, U.K. +0.2%.

The last time I saw someone like somebody else this much, they got married and had babies: Why is Goldman bullish on Reliance? [stockquote]RELIANCE[/stockquote]

Mark this on your diaries: CLSA’s price target for Infosys is Rs 1566. (ET) [stockquote]INFY[/stockquote]

IMF: The world economy will take at least 10 years to emerge from the financial crisis that began in 2008. (CNBC)

Chinaproperty_Oct2012_stanchart

Wait! Is the Chinese property market bouncing back? (FT)

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Analysis: SBIN

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This week’s pick is [stockquote]SBIN[/stockquote]. Trading somewhere close to its 52 week high of 2475, the return over the last 12 month period is about 21%. In the last few months, the scrip has tested the 1800 levels a few times, but a strong support is visible because of the pullbacks with higher volumes.

Oscillators like RSI and CMO are at currently at the levels of 76 and 79. At this high level, there surely can be a correction for a short while. MACD line and signal line are distant apart from each other and you can also pinpoint the decrease in the histogram levels. The histograms can be an early warning sign of a correction again.

Looking at GMMA for a medium to long term outlook is not giving a lot of indication. The long term lines are holding up very close to each other (signaling an upcoming change in the previous trend). Although the increasing separation in the short term lines does suggests a positive outlook for the near term. To wait and see how the long term lines wind out is what can be done best for the outlook.

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SBIN’s average correlation of 0.7 with the [stockquote]NIFTYBEES[/stockquote] suggests that the correlation is strong and positive, Although the movements will not be of the same magnitude as NIFTYBEES.

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SBIN has a volatility in the range of 0.3 to 0.6, which is not a very big range. And hence a close above and below this volatility range can act as a good selling or buying signal.

Looking at the trend-line we can say that it is on an uptrend. Also, the stock has tested 2380 levels thrice during the last 4 quarters, which has acted as a strong resistance for the up-move. With the current up-trend (both long term and short term) the scrip can move up to the same level and test it again. For a short term until the RSI and CMO levels decrease it is suggested to keep out / Sell the scrip. And for the long term we might want to look at the long term lines of GMMA and also the resistance levels at 2380 to take a stand.

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