My Shorting Portfolio

Futures - don’t do it if

a) You don’t have minimum 50 lacs capital
b) It is leverage play , so should have a big risk appetite .You can loose your whole capital in worst case scenario if you don’t have a proper risk management system as well as an aptitude for risk.
c) You should understand technicals very well.
d) Start with small even if you want to start despite huge risk-potential, master your behaviour. Investing is 70% behavioural finance and rest all is 30% ( fundamentals, technicals, knowlegdge etc.)
e) Have a proper risk management system

In short capital + experience +risk appetite are the keys here.

7 Likes

@StageInvesting this game is not for me. I am long term investor.

Have been making many entry errors. So started following technical analysis.

Really appreciate your detailed reply. Will benefit many. It’s important to understand what one SHOULD NOT DO before they start doing stuff.

4 Likes

Added Muthoot finance and Pidilite in shorts

@StageInvesting - I noticed that you have included Deepak Nitrite in your short list. I exited the stock totally on the news about the fire accident. Was expecting a similar reaction from the market as HIKAL. But to my surprise the stock has been relatively strong considering both the negative market sentiment and the negative impact of fire accident.

You have shorted obviously because the chart has given the signal. Can you also share what you noticed in the chart.

PS : Taking the liberty of asking with an intention to learn. I have no visibility about you / your time etc. Please dont mind.

1 Like

A- I only short overvalued stocks, I have my own euphoric-index.
B- Feelings on valuations are backed by EW structure

C- Shorts can continue for months or years till the time the indications of bear market are there ( I keep the monthly contracts rolling). It is just opposite of being like a long term investor , here you’re on the opposite side. Same thing I do on long side, I ride for months and years till the time you’re in a bull market ( like small investors remain long in cash, I remain long in futures if that stocks happens to be part of FnO ,only downside on both side of trade in FNO is that these are leveraged bets- any wrong call or a black -swan even can affect your capital very badly)

Generally I see inverse charts (upside-down) in a bear market, that helps a lot.

6 Likes

Very interesting. Thanks for the detailed reply.

Covered all shorts today. Would look again once this rally gets over.

1 Like

Do you think today’s green rally is a manipulation? Somehow, the Nifty charts (1-D, 1-hr, 15-mins) do not give good feel of Impulse Wave upwards. Please advise.

5 wave advance was over- everything was overheated- needs to cool off to make further space for downward trend( probability)

Had projected the same on Saturday- expected to go upto 15900, but if it crosses the gap at that level -expect it to go near 16900.

+Nasdaq has to bounce back after such a prolonged downside -before it plunges further ( probabiity ), that is helping our IT also to make a temporary recovery.

1 Like

Titan

It seems Titan is doing a Zig -Zag correction from Elliot Wave prespective.

A zig-zag correction has 3 waves - Wave A has 5 legs , B is a counter-bounce and genrally has 3 legs and C goes back to the trend of A and has 5 legs.

The following picture gives the clear idea.

zig zag

We can see similar pattern on Titan weekly chart . It corrected in 5 legs in wave A, now counter-trend bounce in B wave ( it should go back to wave iv low of A near 2305) or it can do 61.8 % Fibo retracment ( near 2400) .

If it fails to cross/close and sustain above these two levels , it can correct in Wave C in 5 legs.

Generally Wave C happens to be equal to Wave A (sometimes Wave C can turncate also i.e. it does not meet its targets ) . Now how low Wave C will go , it would depend how far it bounce back in Wave B.

Keep in consideration that this is a weekly chart. Weekly chart set-up take weeks and months to give results.

For faster results, one can focus on smaller time-frames for similar set-ups - hourly/daily - but short time - frames have slightly lower success rate and lower- the time-frame, lower the potential of up/downside movements.

Disclaimer : This chart is for study and trailing purpose and to create awareness on how EW theory works and how a practitioner workson probabilistic set-ups. This is an example of how EW practitioners select their probable shorting candidates ( not on gut feeling, like market is going down, let me short something :grinning:) .In this example, an EW practitioner would wait for end of B wave , confirmation C wave to start, to enter into a short-position

Long term technical based investing (/shorting) is also like fundamental investing, one takes a bet on certain set of assumptions , few work and few don’t . But if your 50% bets work ,still you can make decent gains ( on the conditions that you cut your losers fast enough)

1 Like

Curious to know your reason to short banking stocks
9.Axis Bank
10.Canara Bank
11.Indusind Bank
12. Kotak Mahindra Bank

All looks fairly reasonable considering the trade between 10 PE - 25 PE and can compound earnings at 10-20% for fairly long.

Already had decent gains in 10,11,12 - more than 15 % ,hence exited. Whereas 9 set-up ,yet to trigger .Waiting for bounce to be over- would re-enter in the shorts again.

Overall - fianancials look weak - the reasons may be - (a) overall economy looks weak (b) interest rate increases might impact the NIMs (c) US banking stocks look very weak and many a times our market follows what happenes in USa (d) technical structure of these stocks tells that there’s further scope to go down .

Apart from that , my basic belief is that valuations of the stocks is combination of several factors - fundamentals are only one of those.

1 Like

Intellect Design

Other stock where Zig-Zag pattern seems to active on daily time-frame.

Let’s see when the B wave gets over ( the pattern fails if it goes above ,trades above and closes above 61.8 % retracment of wave A retracement). If C wave starts - can see a good inside.

Chart is for study purpose only of Zig-Zag patterns ( not in FnO ,so not a shorting candidate)

Don’t agree “Financials looks week” but to each their own.

a. Overall economy - Weak. Sure. But bank’s can raise at much better rates than NBFCs and I think anyone who can raise at good rates or can mobilize CASA will do much better.
b. Interest rate impact on NIMs - I think the opposite will happen especially with A-grade banks such as Kotak, and Axis.
c. US Banking stocks - Short term sure. Long term valuation catches up to earnings growth.
d. Technical - Sure you know better. I am a fundamental guy:)

1 Like

Well ,I also agree with you. It is all about time-frames. May be from 1-5 years prespective ,you’re right.

My shorting positions have certain time-lines - maximum 3/4 months in these cases.Once they reach my low-level targets, may be I start buying them (if they happen to be relatively stronger than the other strong fundamental stocks in my potential -buy-list)

(And when I say Fiancials look weak, am not refering to financials of the banks. My point was finacial-sector’s stocks look weak ,sorry for the confusion)

2 Likes