Category: Your Money

Weekly Recap

NIFTY.2012-12-24.2012-12-28

The NIFTY ended on a positive note, drifting up +1.00% for the week.
Biggest losers were GRASIM (-2.16%), JINDALSTEL (-1.92%) and M&M (-1.38%).
And the biggest winners were BHARTIARTL (+3.81%), TATAMOTORS (+3.56%) and WIPRO (+3.32%).fii.2012-12-24.2012-12-28

Advancers lead decliners 37 vs 13

Gold: -0.10%, Banks: +0.77%. Infrastructure: +2.07%,
Net FII flows for the week: $1,058.37 mm (Equity) and $286.40 mm (Debt)

Algorithms At Work!

The last few weeks have been brutal to cash-only equity investors. The NIFTY has gone nowhere even while swinging wildly on a daily basis. Is there a way to turn a profit given what has been going on?

Yes! With the help of option strategies it is possible to profit from stocks you expect to go side-ways. Here’s what we did.

ACC technical analysis chart

StockViz Option Ideas drew our attention to the ACC Long Call Butterfly around the 10th of December. The stock was under a pennant formation, and was on a decline from its 5 day high of Rs. 1445. With Bollinger bands enveloping 1450 and 1360 levels, there was a strong possibility that that stock was going to be range-bound for a bit.

We entered a long call butterfly trade for December expiry. With an outlay of Rs. 26,750 we bought 5 contracts (market lot of 250).

ACC long call butterfly trade P&L

The payoff chart for our butterfly looked something like this:

ACC long call butterfly payoff

With ACC ending at Rs. 1402 at option expiry, the position made us Rs. 9,950 (38%) profit in just 17 days even as equity holders sucked wind.

Here’s what your New Year’s resolution should be:

KEEP CALM trade options

[stockquote]ACC[/stockquote]

Analysis: RAJESHEXPO

Today’s pick is RAJESHEXPO [stockquote]RAJESHEXPO[/stockquote]. The stock has seen a couple of major corrections after trial flights during the year. The stock has got major support around Rs. 115 levels. Post October, the stock again started an up-move which was stopped around Rs. 150 levels a couple of days ago. This is going to act as a resistance for the near term. In the last three months, the stock has moved 18% vs. a meager 4% of the Nifty’s.

RAJESHEXPO Technical analysis chart

Oscillators RSI and CMO are retreating from the over-bought territory. Also, the stock is trading close to the upper Bollinger band and is hence is short-term bearish sign.

The MACD line has just started a move down towards the signal line followed by the fall in the histogram levels suggesting a bearish move. However, Long-term GMMA lines are experiencing an expansion giving out a bullish signal for the scrip. The candle-sticks produced a bearish engulfing pattern just yesterday after a 5% fall in the scrip.

RAJESHEXPO correlation chart

RAJESHEXPO’s average correlation with the Nifty is 0.44 is positive. The scrip will be replicating the movement of Nifty. [stockquote]NIFTYBEES[/stockquote]

RAJESHEXPO volatility chart

RAJESHEXPO has a historical volatility in the range of 0.4 to 1.2. The scrip’s volatility currently is in the lower end of the range.

To conclude, given these technicals, the stock is a short-term SELL. For the long-term we suggest a BUY because of the strong underlying trend with a keen eye around the resistance at Rs. 150 levels.

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Sunder’s List

Overnight Markets : Dow -0.19% to 13090. S&P -0.09%. London flat. Germany -0.21%. France +0.35%.

Revolution to Riches: A series about the Chinese version of our own Vadras, Chidambaram Jr., etc.

Biggest bull run ever? Iron ore prices have risen 60% in four months after falling to a three-year low of $88 a tonne in September. (FT)

Nearly 9,000 NBFCs may face closure if the Usha Thorat panel recommendation on minimum asset size of Rs 25 crore is implemented by the RBI. (ET)

Swedish meatballs FTW!  Ikea wants the government to allow it to “retail its entire range of products”, including opening of cafes in its stores in India. (Mint)

If you can meet expectations, just revise them down and blame the other guy. “8% growth target is ambitious. Growth could get stuck at 5-5.5% if a policy logjam prevails. etc.” (Mint)

Have a great weekend!

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Analysis: ATUL

Today’s pick is ATUL [stockquote]ATUL[/stockquote]. The stock has been on an up-trend ever since the start of the year. It just saw its 52-week high of Rs. 475 last week.The stock has a support near Rs. 400 levels. In the last three months, the stock has moved 26% vs. a meager 4% of the Nifty’s.

ATUL Technical analysis chart

Oscillators RSI and CMO are nearing towards the over-sold territory. Also, the stock is trading close to the lower Bollinger band and is hence a bullish sign.

The MACD line and the signal line are moving far from each other but not suggesting any direction. Long-term GMMA lines are experiencing an expansion giving out an extremely bullish signal for the scrip. Short-term technical gave a 18×9 and 18×4 bearish signal recently.

Atul Correlation Chart

ATUL’s average correlation with the Nifty is 0.57 is positive and strong. The scrip will be replicating the movement of Nifty closely. [stockquote]NIFTYBEES[/stockquote]

ATUL Volatility Chart

ATUL has a historical volatility in the range of 0.4 to 0.9. The scrip’s volatility currently is in the middle of the range.

To conclude, given these technicals, the stock is a short-term HOLD. For the long-term we suggest a BUY because of the strong underlying trend with a keen eye around the Rs. 400 levels.

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