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Transaction Updates:

Some updates on the transaction front. (Continuing from here)

Bartronics hit my trailing stop loss (last high: 285, today’s price reached 257). I sold at 255. From my purchase price of Rs. 201, this is a Rs. 54 profit in less than four weeks, a profit of 27%. My net gain on this Rs. 10,000 investment was Rs. 2,700 (booked).

United Spirits, another momentum player I had picked, hit near my 10% stop loss within a few days! I had bought a few at Rs. 1848 and the price reached too close to Rs. 1700 for my comfort (which was my stop loss, a little less than 10% but more easier to calculate). I sold at 1735, a loss of Rs. 110 per share. This is a net loss of Rs. 660 (I had 6 shares, close to 10K invested).

Exited parts of Ranbaxy and DRL. I know I had mentioned them as my longer term picks, but right now I am more into the momentum theory and want to pare down my longer term positions. With the dollar weak, I see these stocks underperforming in the near term, which is my current investing horizon.

Kamat Hotels is still doing well, at 175. I continue to hold.

I bought about 10K worth of Reliance Natural Resources (RNRL) at Rs. 78 just before close on Friday. It’s up about 22% today, at 93. Trailing stop loss moved up to 84.

Futures and Options: A Nifty play today – bought 50 Nifty at 4912 and sold at 4942, a profit of Rs. 1,500 for an investment of Rs. 23,000. Intraday, very fast move, would not advise anyone else to take it.

New F&O position: Bought one lot of RIL October future. Very interesting stock, makes acquisition news and has good stuff coming along: I expect great refining margins, EPS rise (and PE contraction) through the IPCL acquisition (which has lower PE than reliance) and some interesting Foreign exchange gains from its FCCB loans. Stop loss is 2250 (closer because this is a leveraged future).

All added up, I’ve booked net profits of Rs. 9,000 (net of losses) and there is about Rs. 3,000 of unbooked profits in teh positions, with a total investment of about Rs. 60,000. Counting just the booked amount, this is about 15% in a month.

At the end of September I will produce a full trading diary which details my trades (if any of you are interested of course).

Note: The quantities and amounts above have been modified proportionately.

Another note: This is an extremely risky strategy. I could have been purely lucky, and the same luck may not occur to you. To me this is money I can afford to lose, you may not be in the same position. Do not try to repeat what I’m doing unless you are fully aware of the fact that you may lose ALL your money. This is a post purely for educational purposes. I will maintain a more detailed trading log.

  • Anonymous says:

    >Boy, you have guts. You sure do. I’d probably die if I have RNRL out of heart attack. Please do have your BP checked, you are way too young. 😀
    I have Bharat Bijlee @2160, still holding on. Unless the price comes down to 2700/- me continuing to hold. Your call on banking stocks please. RBI rate cut in October? And its effect on real estate and banks? And how much are you sitting on cash — 10/20/30%. I am fully invested, good time to exit?

  • Deepak Shenoy says:

    >Anon: RNRL was a hugely risky buy but I was willing to lug it, because it had the required momentum. Worst case I lose about 10%. I’ve made more than that recently so net net I wouldn’t lose much.

    Bharat bijlee looks good. I haven’t analysed the fundamentals but it seems to move well upwards, and not so badly when it goes down.

    Banking: SBI is still a strong play but Axisbank looks good. Don’t bet on the rate cut, I’m sure it will happen given the inflation data, and I’m also sure they will have to hike it back up when inflation zooms up later. So banks are a short term play, but go in AFTER the momentum starts. (It has already started with SBI and some of hte psbs)

    Other than my rapid trading cash (I retain cash reserves of about 20% because of sudden F&O positions I need to take) I am fully invested. Nearly everything is now on a 10% stop loss criteria, other than Nifty BeES which has a 20% stop loss.

    Getting out: You’re a smart investor, I think you can react fast if the market cracks. You might be able to ride this wave and emerge richer even with a 10% dip from the highs (the highs can be 25% higher than here) But if this volatility is uncomfortable, move out – this is not a market for you if BP is a problem.

  • Mr. D says:

    >Would you still recommend Axis Bank, Bartronics and Kamat hotels as momentum buys, or is it too late? (am apprehensive since they are already at a high level)

  • Deepak Shenoy says:

    >Mr. D: Axis bank perhaps. Kamat hotels needs to show another momentum move before you get in – it’s at 170 today and will probably need to move to 180 really fast before you can see momentum take it further.

    Bartronics is out. It moved in the 180-200 range and then onwards, and for the last fwe days is only down. I sold at 255 but it’s at 248 today. Let it settle and tehn show a fast move before you buy for momentum.

    Momentum doesn’t mean that you shouldn’t buy high – it means that you should pick up the early part of a BIG move. I picked up bartronics at 200 by which time it was already up 10%, but it showed the potential to go up much more…and the meat of themove was the 200-250 rise (which I picked). Similarly look at fast movers which have just begun moving.

  • Anonymous says:

    >Hi Deepak,

    Is there any good website about indian stocks that gives a picture of the bonus and splits history of a particular stock?

    I have looked up yahoo finance india, rediff money but could not find any.

    bye,
    chandra

  • Deepak Shenoy says:

    >chandra: Rediff finance is great for this – try it out. It’s not comprehensive though, as I find out as I collect data for Moneyoga. Extremely painful process.

  • Anonymous says:

    >[The first comment in this series was mine. Just mentioning, so that you could pick the context up quick.]

    Market is somewhat euphoric I agree Deepak and kudos to you for pointing that out early. But I am still not sure this is going to move up from here. Basically what I want to point at is that the momentum does not look sustainable. Are you picking up any signals here?

  • Deepak Shenoy says:

    >Signals wise, yes there is some upcoming corrections in midcaps. Essentially get out of downtrending stocks (which go below they 20 day moving average) which DO NOT have actively traded futures or options.

    Most stocks that have actively traded F&O will trade in a range that’ll ensure you can get out in a dip without too much damage.

    There are very active puts at the 4900 levels and I believe hte market should stay around the 4900 level or above it this week. Things may change, I need to analyse todays f&o open interest before taking a call.

    I think October will be fairly stellar for the broad market, except tech and exporters, because of strong results. Banks, Auto and Real Estate may buzz when the RBI finally caves in and reduces rates.

    This is euphoria. It’s irrational, but it will soon start getting “explained” because either India is a great story, or corporate growth is strong, or inflation is under control or some such argument that will be suddenly used to prod the aam-junta to invest.

    When that happens, the general feeling will be “Sensex 20000” or things like that. And then it will be time to exit.

    At this point there is a buildup only. The frenzy must begin for us to really fall, and you’ll see it around you. Watch out for when arbitrary strangers start talking stocks with you.

  • Madhab says:

    >Watch out for when arbitrary strangers start talking stocks with you.

    Well said Deepak, this is the most tangible signal to exit from the market.

    And yes, I am waiting for the dairy on your transactions. I am sure, a lot of learnings will happen readind it.

    Thanks,
    Madhab