Sridhar's Trading Dairy

sridhga

Well-Known Member
Rather, there may be short covering in the last week. Maybe more in the last 2 sessions.
Parallel channel on the monthly chart shows an interesting pattern. Doesn’t look like it’s going to have a runaway spike anytime soon. Until the trend itself gets changed - For which we would need some great news to make a change in the fundamentals.




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Thanks for sharing both of your observations. I think collection of such thoughts give value to the thread. This thread is now more of "Where could BEL go from here" rather than "Sridhar's Trading Diary"

Let us track just one or two stocks and get a feel on those scrips. That could give an edge in trading. Just my opinion, though.
 
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Rather, there may be short covering in the last week. Maybe more in the last 2 sessions.
Parallel channel on the monthly chart shows an interesting pattern. Doesn’t look like it’s going to have a runaway spike anytime soon. Until the trend itself gets changed - For which we would need some great news to make a change in the fundamentals.




Sent from my iPhone using Tapatalk

Thanks for sharing both of your observations. I think collection of such thoughts give value to the thread. This thread is now more of "Where could BEL go from here" rather than "Sridhar's Trading Dairy"

Let us track just one or two stocks and get a feel on those scrips. That could give an edge in trading. Just my opinion, though,
Sure sir.

I’m more inclined towards learning the technical stuff. I’ve just started a couple of months back. So my ideologies may be flawed, I just keep refining as and when I get a hit. And yes, BEL is the only stock that I’m tracking.

‘The whole is always greater than the sum of its parts’ - I’m more than happy to share whatever I know. Anytime.



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Trading is a zero sum game. If some one is losing, another is winning. Moreover, it is a probability game. So, if the winner keeps on playing, he may end up giving back. That is called over trading. Both winners and losers pay brokers, government and other institutions (NSE, SEBI etc) through transaction charges.

Basic assumption is that a trader steals profits from investor i.e he tries to buy low and then sell high to investor. But in reality, a trader tries to steal from investors, other traders. An investor is also a trader in a bigger time frame. So a trader is trying to steal from other traders. That is because the shares outstanding for a company is fixed. You are only trading a fixed supply of paper and so prices go up and down based on the desperation of buyer or seller.
Now, if the company issues more shares, it is trying to steal from the markets. (Oh those ESOPs and FPOs!)

Now, let us look at it another way, instead of the company issuing more shares, the exchanges create additional instruments called futures and people gamble in them trying to match the underlying share price, they are increasing the supply without changing the Earnings Per Share dynamics of the underlying company.

Stock Markets are a game of mass psychology and probability. Traders like us are like gamblers in a casino. End of the day, in a casino the house wins. Similiarly, in our markets, Brokers, Exchanges, SEBI, Government which together constitute "House" win.

These are my thoughts. Comments are welcome.


Regards,


Satya Sridhar Garimella
YOu are from Hyderabad?
 
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sridhga

Well-Known Member
Bharat ETF had a recent FPO for Rs. 6000 Cr. It should be noted that, earlier since when Bharat ETF was launched in Nov. 2017, BEL has been on a down slide. This fund invests 2.15% of its money in BEL. So, this FPO is likely to pump in Rs. 129 Cr. into BEL (which is 2.15% of Rs. 6000 Cr. collected in the recent round.) At the current price of Rs. 110 per share, it results in a purchase of 1.17 Crore shares. Currently 243 crore shares are outstanding in the company as per the latest shareholding report. Out of this, the Government holds 162.74 crore shares, and this is not available for trading. Of the balance 80 crore or so of the shares, let us assume that 3 % are traded in the next one month. That results in a float of 2.4 crore shares. Also, to be noted, is that, about 50 lakh shares are traded every day. Assume that out of 50 lakh shares, day traders are causing 60 % of volume. (The share has been recording 42% deliverables.) So realistically 25 lakh shares really change hands every day. A purchase of 1.17 Crore shares in the next few days is going to have very minimal impact on the price. Consider the fact that the share was on down turn mode for the last 6 months, we can safely assume many mutual funds and investment houses are offloading in large numbers. There seem to be no fundamental triggers for the stock to move up. I may be right or wrong in my analysis. Let us see how it goes in the coming weeks.
 
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sridhga

Well-Known Member
I have a question to all - please tell me the R:R in the following scenario:

10 people bet on a horse/car race. Each of them wager 100 & can bet only once. In case a person bets on a losing car/horse, he loses his wager. In case he is the only one who bets on the winning car/horse, he gets 200. In case there are more than 1 person betting on a winning car/horse each winner would get 130.
Is the Risk-Reward 2: 1?
 

sridhga

Well-Known Member
The probability of correlation between BEL and NIFTY opening positive or negative together is 62%. This is based on the data between 1st August 2017 to 20th June 2018. The probability of correlation between BEL and NIFTY closing higher or lower together over previous day is just 54%.

This is not sufficient probability to trade BEL based on NIFTY movement. BEL has its own mind. Just an observation.
 

sridhga

Well-Known Member
For the data from same period, if BEL opened in green/red and ended the day in green/red correspondingly, the probability of the same trend continuing for the day is just 54%. So, trend reversal happened 46% of the times intra-day.
 

sridhga

Well-Known Member
Why should we assume that BEL will go up or go down linearly? So far, it has come down linearly in the last 6 months. May be, it will identify some number from here on, and, will revolve around that number for some time. Any temporary deviation will experience a pressure to revert to that equilibrium.

If you ask me what that number is today, it appears that the number is 112~115 for this month. It will swing above and below this number range. Just a thought.

What do you all think? Please post.
 
Why should we assume that BEL will go up or go down linearly? So far, it has come down linearly in the last 6 months. May be, it will identify some number from here on, and, will revolve around that number for some time. Any temporary deviation will experience a pressure to revert to that equilibrium.

If you ask me what that number is today, it appears that the number is 112~115 for this month. It will swing above and below this number range. Just a thought.

What do you all think? Please post.
Your calculation is almost close to what I was assuming based on the charts. The long term support seems to be around 95-100 and BEL has spent most of time in the recent past around 120ish. So I think it would be moving around a broad range of 95-125 (pivot around 110-115) until the next trigger - May be with the next quarter results or a major news break.



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