iCharts Discussions

[amitagg]

[welgro]

[riteshucha]

is 7490 closing basis or just breach of 7490 level?

[welgro]

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[reachchirag]

Dear sir,

Your views on adani power and adani enterprise for medium to long term.

[welgro]

[welgro]

Nifty spot next important support at 7490(previous swing pivot) Once if trade below this level next important support at 7400 (Parallel pattern).

Important note: Nifty spot hourly chart negative breakout line resistance 7620 level. Nifty spot if close (Hourly close) above the trend line then exit all positional shorts. Bulls are waiting in that level.



Bank nifty spot head and shoulder pattern target 14965.i am expect some small profit booking pullback here. Pullback wave if not break the top parallel line then positional bears let’s start next counter attack.

Note: Key Resistance Level: 15400 (Bulls can shine when bank nifty spot once if trade above KRL)

Today bank nifty spot if close below 14965 then downside first target 14475 (Eod BOF) then parallel pattern target 14000.

[welgro]

One friend asked me “Sir, you told 8‘Th June 2014 in Nifty spot long term target 10086.but now you are told nifty spot downside target 7000 etc … I am not get clear view. Please clarify my doubts”

Dear friend,
First understand basic chart analysis. Chart analysis has a total three types of trend analysis.
1. Long term analysis (Monthly charts).
2. Medium term analysis (EOD – Daily and weekly charts)
3. Short term analysis (Hourly in index 4 Hr chart for commodities)

Now nifty spot reached the medium term trend channel breakout target. Some profit booking (Supply) going on this level. Therefore nifty spot currently struggle to cross at this level (7700).In-case nifty spot once close (Eod) above 7700 then current bullish trend will continue.

Long term target still be valid. Nifty spot seems long term trend positive breakout line support at 5900 level. Nifty spot once close below (Weekly) this level then only long term trend will be enter bearish mode. Otherwise every throwback is buying opportunity for long term investors.

[welgro]

Risk Management of Portfolio using Derivatives

This article is surely for you if you invest in Equities (Direct shares or Equity Mutual funds) . Many people might have seen there investments go down to anywhere between 20-50% , if they invested in Indian Stock markets around Dec 2007 or Jan 2008 , and they might be wondering if it will go more down in value .

Just like we know take life Insurance to cover the risk of Life , Home insurance or car insurance to cover the risk if anything goes wrong , Can we also take Portfolio insurance ?

What does insuring the portfolio means ?

What does insurance means ? It means securing something from some event which can cause loss or damage . We ensure our Lives , our homes , our Car . What happens when nothing happens to our lives , Home or Car . We pay a small price for it and that is a kind of fees , which we pay for the security .

In the same way , we can also insure our portfolio , We can make sure that our loss is limited, The loss is always limited. If you are one of those who invested in Equity mutual funds or Shares during 2007 or Jan 2008 , And you are sitting on a loss of 30-60% , you will understand this very well . Any one who invested Rs 1,00,000 in stocks or mutual funds has loss of anything from 30,000 to 60,000 (depending on his investments) . Just wonder if they could insure there portfolio and make sure that there loss can not go beyond a certain limit . That would be wonderful . We are going to discuss this today .

How to insure your portfolio ?

There is no specific product or service for this , you have to manage it using Options (Derivative Products). ( Read it in Detail)
I assume that you now understand what are Options and how do they work , what are call and put options and what is expiry date , in case you have not read about it , please read it at above links (try first link to get basic info).
If you have invested in Mutual Funds

Ajay has invested Rs 2,00,000 In Equity mutual funds in Aug 2008 , Nifty is around 4,200 . He has invested his money for 4 months and would like to withdraw his investments in Jan 2009 . He is a smart investor and knows that markets can crash and there is no limit to how much down it can go , So he decides to minimize his risk . For this he has bought Nifty 4200 PA DEC-2008 trading at 200 , for which he spent Rs 10,000 (Rs 200 * 50 lot size.)
Now lets see 3 different cases and what happens to his portfolio

1. Markets boom and goes up to 5,000 : Nifty has gone up by 20%
I am assuming that his investments followed and his Rs 2,00,000 has grown to 2,50,000
Value of his Nifty PUTS : 0
Profit from investments : 50,000
Loss in Puts : 10,000
Total Profit : 50,000 – 10,000 = Rs 40,000

2. Markets Crash by 25% and nifty goes down to 3,100 .
His investments follow and now its value is around 1,40,000 , but his PUTS will be valued at 1,100 (4200-3100) . So its value at the end would be 1,100 * 50 = 55,000.
Loss in investments : 60,000
Profit in PUTS = 45,000 (55,000 – 10,000 investment)
Loss = Rs 15,000
Here you can see that Out of his loss of 60,000 , 45,000 is covered from PUTS .

3. Nothing happens and markets are still at 4,200 .
His investments will be almost same , and his PUTS will expire with value 0 .
Profit from investments : 0
Loss from Options : 10,000
Total loss : Rs 10,000

In all the 3 cases , we should note that in all the cases his Losses are minimized .

Thanks to : jagoinvestor

[pkveenu]

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