Invest Without Emotions
The StockViz reference portfolio we introduced last week is coming along nicely. The algorithm trimmed quite a few line-items and consolidated around eight stocks. 
Given NIFTY’s +1.00% for last week, the managed portfolio returned +3.00%.
More than the returns, the portfolio is managed by an algorithm, making the process
Talk to us about our Quantitative Portfolio Strategy Execution.
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%).
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)
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.
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).
The payoff chart for our butterfly looked something like this:
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:
[stockquote]ACC[/stockquote]
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.
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’s average correlation with the Nifty is 0.44 is positive. The scrip will be replicating the movement of Nifty. [stockquote]NIFTYBEES[/stockquote]
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.
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.
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’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 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.
