Rahul Ghose of Hedged
“The only Adani stock that I would look at from a medium-term perspective is that of Adani Ports. This is the only stock that made a nice base and broke out of a rounding bottom formation,” Rahul Ghose, Founder & CEO of Hedged, an algorithm-powered advisory platform, says in an interview with Moneycontrol.
One can look to reenter this around Rs 630-640 levels and hold on to it weathering the near-term knee jerks, he advised.
Ghose, an options trading and hedging expert with over 17 years of financial market experience believes that in the medium term, Asian Paints looks good on the charts.
“The festival of colours just went by and one of the bluest of the blue-chip names is good to have in your portfolio to add some actual colour in our lives,” he says.
Adani Group stocks are mixed in their performance and among them Adani Green Energy, Adani Total Gas and Adani Transmission consistently maintained their uptrend in the current month. What is your strategy on these stocks?
Adani Green Energy, Adani Total Gas are all down 70-80 percent from their peaks, the daily rally that is happening in them recently is because of the fact that these stocks are in the cash segment and have daily circuit limits unlike Adani ports or Adani Enterprises which is in F&O.
The F&O stocks of the Adani group have rallied 50 percent or so from their lows whereas these are rallying only 5 percent a day and are hence playing catching up. This is why we see a see-saw movement in the other Adani stocks whereas these ones are still rallying in a straight line.
The only Adani stock that I would look at from a medium-term perspective is that of Adani Ports. This is the only stock that made a nice base and broke out of a rounding bottom formation. One can look to re-enter this around Rs 630-640 levels and hold on to it weathering the near-term knee jerks.
Another slightly safer strategy that one can plan when prices reach close to this level is that of buying the April futures of Adani Ports (assuming this price comes in March) buying the At-the-Money (ATM) Put option at that time and selling a 3.5 percent away OTM Call option making a modified collar of sorts.
The advantage of this type of strategy is that, if the price of Adani Ports bounces or stays stagnant one will profit very well and even if the price goes down, one can roll down the calls and come out of the trade at breakeven.
Will the Nifty hit the low of September 2022 in the coming weeks?
Our algorithms at hedged had given a hedge your portfolio signal right at the 18,100 level itself. Now, the September low of 16,750 also coincides with the lower band of a demand area on Nifty and hence it will not be an easy task for the index to break this decisively.
The two points that need to be considered for this break to happen are: One Nifty has to break the 17,000 level with a bearish closing, as the highest amount of put writers is present at this level. Also breaking this would mean breaking the long-drawn trend channel on the daily chart. Secondly, the break of 16,750 would only be justified if Nifty starts walking the Bollinger band at the weekly chart.
Do you think the Nifty PSE index is on a strong footing despite the correction in broader markets?
The strong footing on the Nifty PSE index will remain so only if it manages to sustain over the 4,710 level. Although this level is only about 3 percent away from the current market price, I would not initiate any fresh longs until this level has been conquered.
Investors holding positions should use any rally to exit their positions and create fresh ones only after the level mentioned sustains.
One might see some stock-specific action as the stocks are poised very differently but it is important to note that this level of Rs 4,700 also happens to coincide with the top of the weekly upward trending channel. Also, the current move-up that is underway is yet to be backed by the momentum indicators on larger time frames.
What are three bets based on technical as well as F&O and why?
I’ll come to individual stock names, but the best way to play such a brutally choppy and volatile market is by doing the following strategy, which has a very high-profit potential chance and is also very safe to execute:
One can buy the Nifty 17,100PE of April 27 expiry and sell the 17,000PE of April 6 expiry. The total debit by doing this would be approximately Rs 70, with four weeks left in the April series to make back this debit. If the markets move down, this strategy will make money. If the markets stay sideways, it will make money.
What’s even better about this strategy is that, if the markets rally from here as well, the entire debit of 70 points in the strategy can be easily covered by selling weekly expiry puts for the other remaining weeks of April.
Imagine a strategy in which all sides of direction are covered, a little gift from me to your readers. This is called a modified cross-calendar spread.
For the medium term on the stocks front, Asian Paints looks good on the charts. The festival of colours just went by and one of the bluest of the blue-chip names is good to have in your portfolio to add some actual colour in our lives.
One can initiate a buy in Asian Paints when the price crosses Rs 2,900 level as the stock is coming out of a weekly demand zone and has formed a nice base near the Donchian channel bottom as well. From a fundamental perspective also, the stock is fairly valued and has just broken out on the upside from a seven-week narrow range. One can look for targets around Rs 2,996 and Rs 3,300 in the medium term.
What is the best pattern or strategy that never disappointed you in your stock market journey?
While trading I rely a lot on the proprietary tech that we have developed in-house ourselves. I basically give a success rate to each indicator at 16 percent, which simply means that I expect any indicator to have a strike rate of only 16 out of 100 times. We then use a quad-fecta combination of indicators to further narrow down the direction of movement depending on the market situation. There is a different set used each time based on the trend and VIX levels.
The final touch is I use a situation-specific options hedge strategy, but yes, am always hHedged no matter what. One of my favourites among these is doing long expiry short straddles on the index, for example, doing short straddles of the June month expiry in Nifty when we are in the March month with offset units. I also love using the ratio spread strategy. I feel it has very good odds of success if you are able to evolve it when the price reaches your breakeven points.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
