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Charts & Analysis

A Phenomenal Two Days

What momentum! Nifty and Sensex are reaching new highs – with Sensex near the 19,000 mark, and the Nifty crossing 5500.

Firstly some updates. From my positions, things have spectacularly improved, to give me a net return of 21.2% since Aug 30. (And I’m still at 20% cash!) The last two days have been just incredible.

Sintex has gone up 5% today, to 392. Reliance is still holding strong at 2630, and they have a board meeting tomorrow. Jai corp has been limit up the last two days, with a net 10% return since then. Suzlon is now at 1775, a gain of around 28%.

New Additions: IGate at 338, a stock to hold till December, they are planning to buy back all shares, and that should be at a good premium to the current stock price. Praj Industries at 228; the new ethanol blending policy fits very well for a six month play (I know this is not momentum, but I’m taking a detour).

On the F&O Side: NIIT Tech yielded a small gain, but gains from a Nifty 5400 call and Nifty 5600 call are stupendous – nearly 350% on the former and 60% on the latter. The Reliance future is now at 2663, a return of around 35% on the margin paid. An RPL call bought on Wednesday at 10.85 is now at 17.2, a 60% gain.

Overall, I’m up about 21% (this is considering taxes and brokerage etc.). Not too bad, but still under the index. Some learnings:

  • Most of the first part I was underinvested. Less than 20% of the amount was in stocks, not a good thing.
  • Most of the gains are in F&O. The moves are fast and tend to be very good because of the leverage possible.
  • I can’t trade intraday. I think I’m not made for it. While I’ve made some profits, the biggest chunks are in the stocks and F&O that I’ve held for a while. A weekly pattern may work better for me.
  • The markets move really fast, but you needn’t be on them all the time. Even at my level, I find it difficult to understand small moves, but the larger pattern is more visible. So it’s best to watch the market around four times an hour and then stay on the screen in the last hour (when HUGE moves happen).
  • There are always new stocks moving, and you have to watch for fast movers. Don’t wonder why – the questions must come later.
  • You needn’t catch the full move. If a stock moves 50% and you catch only 30% that is also worth it.
  • Respect stop losses especially in futures trades. It’s stupid to lose a lot of money when you are leveraged. When you make an exception, understand that you stand to have much higher risk. I doubled an RIL position once when technically I should have been hitting my sell button, but I had bought for the board meeting and felt the stock has power. Since the risk was high, I exited most of my other futures positions on that day.

Okay now a disclaimer. I’m doing this because I can afford to, and because I have the time to. Don’t do this if you don’t have my appetite for risk, or if you can’t provide the time to track the markets. This is extremely risky. I may just be lucky. This is not stock or market advise.

I think tomorrow will be a big day – either up or down. There is a distinct possibility of an RIL Split or Bonus, either of which will drive the stock, and therefore the market, to higher levels.

Infy results were out today but I’ll analyse those in a separate post.