No one saw it coming.
On Monday, October 01, at one stage NIFTY was down 100 points. It started gaining upward momentum from there and shot up smartly to cover all the deficit and then go up by more than 100 points. It ended the first trading day of the week 77 points higher.
People thought bulls are back to take control of the market.
After the holiday on October 2, 2018, we were back to business on Wednesday. From then on, it has been a downward journey at a frantic pace.
Stocks have lost value as if investing is going out of fashion. Every stock is being sold. Only relief seems to be in IT and Pharma space. Everything else is just sell and forget.
I have seen such events earlier on multiple occasions. Traders generally do not possess good memory. They do not remember events from the past and do not learn from those events. The most recent example of this kind of decline was in March 2015 when NIFTY made the then all time high of 9119 on March 04, 2015 and then lost its way to come down to 8342 on March 26, 2015 ( Expiry Day).
Present trend is something similar.
A trader can not chose the market. We have to take our trades whether the trend is bearish or bullish.
This was NIFTY over last 5 days:
With this kind of steep decline, our trades should have done well. Fortunately for us, they did.
Star of the week and extremely weak stock was HINDPETRO.
We had entered into PUT 240 option on the first day of this series. The stock made both side moves almost everyday. The Option kept gaining value every morning and then giving it away by the end of day. On Thursday, the Finance Minister put a financial burden on Oil Marketing Companies and stock prices went down like a pricked balloon.
From the normal price range of around Rs. 250, the stock fell to Rs. 194 in the last 10 minutes of trading on Thursday and went down to Rs. 163 yesterday.
For a PUT buyer, it was a stroke of luck.
The readers of this blog are aware of this move and those who were in this trade made good exits at Rs. 67-68 range after the trading opened in this Strike Price after some technical glitch by NSE.
I too got out after waiting out the full day at Rs. 76.00, the last price and high price of the day.
A good trade already in the bag, we expect to do well this month.
Ashok Leyland made a quick down move after the RBI policy announcement. In fact, most of the stocks made such moves but we can only be concerned about our trades. Unfortunately, I got out of this trade ( PUT 110 ) at Rs. 5.50 and then saw it going up to Rs. 9.50. Finally it ended the day at Rs. 7.90.
This was another example of not following my own advice of being patient in a trade that is doing well.
But it happens. We are humans, we make errors. The key is to note these errors and avoid them next time. I was patient with HINDPETRO but could not sustain that patience with ASHOKLEY.
Well, that is done now and noted for future.
IDEA made another 52 week low at Rs. 32.95 and PUT 37.5 is now at Rs. 5.00.
TATASTEEL and ZEEL also came down . ZEEL too made new 52 week low at Rs. 415.10.
This is the summary of our trading positions:
All the prices are the last traded prices. I know many readers have exited at lower prices ( I too have done that) but some may still be holding the trades. This is what the week did for us.
I have said it earlier and will say it again– Let us be grateful to the market for such events and profits. Our job is to initiate a trade as per our method. After that it is for the market to deliver. The moment we start believing that we are smart, market teaches us a lesson which proves very costly.
As most of the readers have exited from HINDPETRO, this option will be considered closed from now and its further performance will not add or subtract anything from the above chart.
A good week overall and we look forward to coming week with anticipation.
Enjoy the weekend.
Disclaimer: This post and examples are for teaching purpose only and are not meant as advice/suggestion to trade in these stocks. Trading in Futures and Options can lead to big losses and should be done with appropriate knowledge and advice only. Mentioning the stocks here does not imply that I have a trading position or likely to take a trade in these stocks.