Making of a Trader/Investor

Discussion in 'Words of Wisdom' started by anil_s_trivedi, May 13, 2014.

  1. Galts Gulch

    Galts Gulch Well-Known Member

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    Excellent thread ... Keep up the good work ......
     
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  2. anil_s_trivedi

    anil_s_trivedi Well-Known Member

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    This is a interview excerpts with Atul Suri, Technical analyst...who works with Rakesh jhunjhunwala...around Nov-2012...

    I like few points..just highlighting it...

    Bullish on market; target for Nifty at 6730: Atul Suri
    The Indian market has extended yesterday’s pullback rally. Trader Atul Suri is very bullish on the market. He expects the Nifty to break lifetime high in the medium-term. "I have technical target of 6,730 on the Nifty," he adds.
    According to him, some spaces in the market like consumer space, FMCG, pharmaceutical space and autos are in a very sublime space.
    Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy.

    Q: Are we on a strong bullish trend from here?
    A: I think so. I have been maintaining that. My reasons are as follows. If you look at the Nifty per se, you will notice that we had made a major bottom in December 2011. So, it has about been 11 months. I think it was around 4,530. We had an upmove that took us to over 5,000. That was the first leg of the upmove. Then the market corrected to 4,770 and then again that top of 5,630, which was a Jan-Feb top of early 2012, got taken out.
    The basic fundamental way of looking at markets is a case of higher bottoms and higher tops. It definitely signifies that for the last 11 months, since the bottom of 4,530, we have been in an uptrend. This breakout, previous top of 5,630, which got taken out, was very significant.


    Q: You were telling us about that 5,800 level. Do you see that top being taken out sometime in the next few weeks?
    A: I do think so. I think we are going much higher. The way the market performed at this 5,630 level, which was a previous stop and became a good support, it went into almost a sideways consolidation. So, after such a big upmove, the market was not willing to give anything back. Infact it stuck so well at 5,630, we had one day, which gave a false downside breakout, credit policy day.
    You had bad news, you had a sell-off, and there was no follow-up. That is telling the market is much stronger than the sentiment or the mood. As I see the patterns panning out, in the medium-term, I see no reason why we would not move to a lifetime high and much beyond.
    If I study the charts, I think the big trade for Nifty, for me, is that we will cross into a lifetime high. Infact I have technical target of 6,730, to be precise, on the Nifty. My thesis will hold till it does not go below 5,200 because that is the last major intermediate bottom. The moment you make a lower bottom, all theories of bull market or an upmove get negated. I am very bullish on the market. The trend has been up. We have been making higher bottoms, higher tops. Again sentiment and mood may not reflect that.
    Some spaces in the market are in a very sublime space; consumer space, FMCG, pharmaceutical space and now the way autos have started performing. It is very important where you are positioned in this market. If you are in one of these three-four sectors, you are very likely to have half the stocks almost at lifetime highs.


    Q: For people, who have invested in the market, whether they should stay with the winners, which is your FMCGs, pharmaceuticals, select autos or should they now be looking at bigger gains from some of the sectors, which have not done very well, like infrastructure, real estate, select beaten down banks? Would it pay technically to be with the winners and not cash in?
    A: I absolutely think so. My observations in previous bull and bear markets have always been that always early leaders outperform over a period of time. There is always doubt and scepticism expressed that ‘oh, it has become too expensive, they have already run up, what is new about it, it is over-owned.’ But as the bull market unfolds, you will find that leaders continue to be leaders.
    Look at some of the consumption stocks, some FMCG stocks, they just do not have a bad week. They may have a bad day, but not a bad week. So, their strength beholds strength. At lifetime high, it is not good to challenge them. Pharmaceuticals, FMCG and consumer theme stocks are doing very well. I mentioned autos because the kind of breakouts and lifetime highs you are seeing in auto stocks in the last few days is very impressive.
    Then is the case of the argument of laggards. You may have a very high percentage return because they have not moved. In a bull market, everything goes up. A high tide raises all ships. But you have to be very careful about stock selection. You should pick the right real estate and infrastructure stock because in case you get stuck in a bad stock and the market does not pan out the way it should, you can get badly slammed. These stocks are the ones that will hurdle into new lows very fast.
    It makes sense to play the space, which has not moved. But, as a trader or an investor, you must have the capacity to pick those stocks that are likely to be winners. If you do not have that ability to pick good stocks then it is best to be in the sector, which in itself is a winner, a lifetime high. So, it is a question of abilities. The latter, which is going and picking out stocks that have not moved, is little more challenging. The rewards are great, but then risk and reward are go hand in hand in market.



    Q: What would be your approach to this kind of a trend? Would you use every significant dip of 4-5 percent, like the dip we had from 5,800 to 5,600, to just keep accumulating stocks?
    A: I think so. Independent stocks have their own behaviour, like the stocks which were moving up. They have corrected last week and gave almost 8-10 percent move. It takes just a day for them to recover a month’s underperformance or relative downmove. So, it is essential to look out and identify your sectors.
    You have three-four sectors that are doing well. You cannot have all the stocks. So, you focus on a few stocks and look for weakness in them. The trend being what it is, hopefully, in the next upmove, they will get into lifetime highs. That is the way to trade.
    Obviously, you need to have a bigger stop loss on the stock, which means having a lower bottom. That is the over-imposing principle on all trading and investing. One should continue playing strength. Look for corrections in these areas of strength and go out and buy those stocks.
    It has been a year. If I recommend an FMCG, Lever or ITC or Tata Global, you say what’s news. But the fact is that every week, every month, these are the stocks that are making lifetime highs. More importantly, they are tradable. Stocks that are very volatile, which go down 20 percent, come up 20 percent in a day, are very difficult to trade. This is because the day it goes down 20 percent, your stop loss gets triggered and you sell it and then you go ahead and buy it back at 20 percent higher.
    I would rather be in a stock that is down 2-3-5 percent, but 10 percent higher. So, it is better and easier to be in this trade rather than in a very choppy trade. But these are personal preferences. I would still prefer lifetime highs, trading strength.



    Q: Do you see a correction as deep as 5,200 or would you intermediate markers between 5,200 and current levels? Where you would probably get a bit worried, if those levels were taken out?
    A: Yes 5,200, at the moment. The way the mood is in the market, in the short-term, it seems a bit remote. But I am talking about a longer-term trend. There you have to play with bigger numbers because I see an upside to around 6,730, another 20 percent from here.
    But in the short to medium-term, the correction, which you are having in the last few days, would take you to around 5,450 or thereabouts. Why I feel those levels are important is because there is a gap out there. These are the gaps we had on the announcement of policies like FDI in retail. When there are gaps in the market, they are sometimes retraced and filled. It is not essential that they have to, but that is a sort of a suction area and I expected that this fall, the sideways correction, which we witnessed last month, the rangebound market would move to those areas.
    So, for me around 5,450 is where I would not be worried, even if it gets there. It was a logical space to be in and no one is complaining because the market held out 5,630 levels and gave a one day false break-down and has moved up very well. This infact tells me that in case the market does take off these levels, the rally could be very sharp. But, even if it goes to 5,450 or thereabouts, I wouldn’t be very worried.



    Q: You did not mention banks which are very important for the market to move higher. What do you see on the Bank Nifty?
    A: The Bank Nifty is like two animals in one body. We have the whole private sector space. In case, we had a private sector banking index, it would be at a life time high. You got your PSU spaces, which are struggling. So, the Bank Nifty hasn't been very spectacular in performance. But, in the banking space, it is important when you were in those private sector areas, you would be doing great. The PSUs would be giving you volatility. What you have is a bit of a blended trend in the banking index in the short-term to medium-term and that is the result of divergent performances.
    Bank Nifty is important. It leads the market and rarely does the market fails. If the Bank Nifty starts that move, a better trade would be to look at the private sector banking space because there you have seen some fantastic charts, some sublime charts and movements. Bank Nifty is important showing good strength, but again, you would rather be in a private sector bank.


    Q: What is happening with Reliance? For once it looked like Reliance was beginning a move, maybe even provide leadership, but it has stalled again at Rs 800. Would you still in the near-term not expect leadership from those quarters?
    A: The oil and gas space, with the second largest sector weight in the Nifty, has been an absolute laggard. It seems to be laid for a scuba diver who is causing the Nifty to underperform. Reliance is a big and a sentimental player. For people, who have been in the market for very long, they love to look at Reliance and see it move.
    But Reliance has not obliged. Infact the whole sector has not obliged. There are many more spaces, many more sectors. It is a bit of an avoid at the moment.



    Q: In autos, are you seeing disparate trends? M&M have been tearing away, Tata Motors, Maruti have not been too bad, but two wheelers have been a bit of a drag. Are you secularly bullish on the auto space?
    A: These are brighter pockets and certainly many of them are making lifetime highs. Some in two-wheeler space are also doing well like Bajaj Auto. So you do have places, but my observation has been that auto index is again an important place to be in. This is because it is one of those secular kind of sectoral moves that when you get it right, they trend very well and you also do that on the downside.
    In any bull or bear market, you find that when the autos get into space, sector index and those stocks give very good secular trends. So, for me, auto is as interesting as banking, a pace by virtue of its weightage. Reliance is important by virtue of sentiment. Auto is an encouraging theme and has emerged in the last few days, similar to some of the auto stocks. So, one would definitely like to be with the ones that have already broken out into lifetime highs.
    But even the laggards will catch on. There is a bit of an environmental change that happens, mood swing and you will see a much broader sectoral rally. It has been an important development. Apart from the regular three sectors, you got a fourth one putting in its hat and is going to be important.


    Q: The one, which is probably least owned by general crowd, is pharmaceuticals. We had some spectacular performances in even largecaps like Sun Pharmaceuticals, Cipla, Dr Reddy’s. Is that something you would continue to be bullish on?
    A: Absolutely, whenever you put the argument of pharmaceuticals to anybody, they say 'oh! stocks have moved up too much or what is the kind of volume that is available.' They are not so liquid, but are perfect recipes for stocks that have continued to move higher. Scepticism is important because when everyone gets very sure about something, there is a problem. So, pharmaceutical has a lot more space to go.


    Q: How do you read the global set-up right now? Is it giving you the confidence that they might continue to play a supportive role for the Nifty over the next few months?
    A: I guess today for the risk-on, risk-off trade, it is probably the most important thing that there is FII money that has been driving our market. So, the risk-on trade is something you have to keep an eye on.
    One of the most efficient ways to do is through currency. If you look at the DXY, which is a good representation of the currency baskets, it is hovering around 80. Anything above 80.20-80.30, I would be worried because the pattern that it has formed tells you that if this 80.20-80.30 is taken out, you could have another dollar or two dollar move. And that would symbolise a little bit of a risk-off kind of stance.
    So, I would keep an eye on currency. Till we have no major spikes in the dollar, it is fine. Infact slightly weakening dollar to around 79 would be very good for the markets. That also goes for the whole commodity space, which is linked to it. FII flows is an important factor for equity markets globally and ofcourse for India. India is an important recipient of global flows.
    We know what happens when FII numbers are positive and negative. In the short run, yes, the risk-on, risk-off trade is the single-most important factor. The best way to look at through the dollar is 80.20-80.30 on the DXY. Beyond that is something that I would be really worried about the risk-off if there will be one.
     
  3. Bigbear

    Bigbear Well-Known Member

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    Nice,

    Atul suri is the only guy i follow... He has the right mindset, which i think is the reason Mr.rakesh jhunjhunwala and him are together..
     
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  4. srri

    srri Member

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    Anil Sir,
    Please continue this thread,
    You are sharing very valuable information.:)


    Regards,

    Srri
     
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  5. mixter

    mixter New Member

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    Good Thread. Informative .

    Thanks

    mixter
     
  6. raul12

    raul12 Active Member

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    anil_s_trivedi likes this.

  7. anil_s_trivedi

    anil_s_trivedi Well-Known Member

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    One of the major problem for a trader/Investor is getting carried away by fellow traders and getting highly influenced by their methods.

    This is one of the major problem in technical analysis curve. We learn something, then someone come up with studies like, Elliottwave, Marketprofile, Gann...etc...etc... and in course we get attract to these findings, and we too start learning, these approaches, consuming major time portion of our studies to these newer findings. One of major influence is due to followers of this studies. They boast of success with these studies, like its the Holygrail. But they if ask to reveal their strategies, simply run away, or give ambiguous reply. One of trader here, simply refuse to answer which software he uses, such is the height of keeping secret.

    So what should a trader/investor do. Completely shun its eyes to these attractions. I after studying markets since 2003, came to conclusion, stick to one method which give you money. Dont keep hopping here and there. These traders which boasts of their studies, will never reveal there performance. Learn something which you can teach to your childrens. We are on the journey of wealth building and proving others we are right in our analysis,we are the best.

    Time is limited in our life, and lots of goals to be achieved. If you keep wasting crucial time to someone else's methods, which they not disclosing, the you are the bigger fool here. He may be here, for some other reasons.

    This whole writing is due to, the problem faced by one of fellow trader, who is in markets since 2008. But keep changing his studies, as and when these charlatans attract with their studies. These trades now got confused what to follow, and in mean time also fail to sharp his own line of studies which he is trading with. Now he clueless, what to follow. Everyone boasting of he is the best. His method is the best.

    These is serious issue, and need great introspect on account of investor/trader. What is the best for him. What suits you best. Just follow that thing, dont be a victim.
     
  8. test123

    test123 Banned

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    Trading is like Talent and Art....
    You have to develop your own style.

    Respect All mentor nun ....coz no one is perfect :)

    Thomas Edison must have made more then 1000++ light bulb . ppls must have called
    him fool. In the end he made it what he dreamed of.......

    same is with trading .it takes time to understand this game .It took me 1 decade to learn how to play this game intelligently !!

    Being said that Word IMPOSSIBLE itself says I M POSSIBLE !! :)
     
  9. anil_s_trivedi

    anil_s_trivedi Well-Known Member

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    Dear test123,

    I agree everyone has his own trading style. But the newer trader get attract to false claims by some of preachers, who simply are here for some other means, surely not for sharing knowledge.

    This is what hurts the most. Every study is good in itself, (I cant comment on how each is useful) but one should respect others too.
     
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  10. SaravananKS

    SaravananKS Well-Known Member

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    Well said anil,
    I got impressed by highlighted words :clapping:
     
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