BraViSa TempleTree-India Market Calls

[d_s_ramesh]

Thanks Rahul,

As you have noted and checked, Beta works well to find the best performing stock. This week too we have DLF giving substantial gains against the Index, While RCOM has done the same but on the Bearish side. And the same with JP.

I have shared this data with many other professional traders to keep it in observation. It will take some more days before all the reports are compiled. It would be helpful if you could provide the same from your experience and after 4 weeks we shall go through the performance.

If it is found useful, then we get an extra tool to trade.

 

[rkkarnani]

Thanks for your request, Simple Trader. I will do that.

Beta above one shows those stocks that will be performing better than the index. This week we have Few stocks that have a Beta of 2 and above that means these are the hottest stocks in the market now and both up or down moves in these stocks will almost be double than what NIFTY moves.

Likewise a negative beta means, that stock will move against the index. Now we have BPCL there. Don't know what would be the news, all the refinery stocks are strong while the index is weak. But this record shows that if Index falls BPCL will be against it.

Even I am a learner on these tools. Some senior members can throw some more light on this subject for the benefit of other traders who are willing to learn.

Ramesh, Would it also not be correct as per Beta value that a Stock with Beta 2 would move much more "down" when the Index moves down!!! Outperforming the index in its downside move!!!
And a lower value of Beta stock would move less high and also move "less" down vis a vis the index. So would it be correct to say that we first gauge the direction of the Index and then select the high Beta stock for taking position.

I am told that there are contrarian stocks too, which move opposite of the Index.

 

[d_s_ramesh]

Very true rkkarnani,

It would be a nice decision to check the direction of the Index and then select the stock in that direction and if that happens to be a 2 beta stock, then we can expect it to perform twice the level of the Index move.

The negative beta stocks are those which move against the index. As I had written earlier, I think in some other post that BPCL was a negative beta stock and it had a good move last week when index ticked down.

This Weekly Beta seems to be an useful tool, I took the initiative to work on this from the guidance a senior trader gave me. Let's all join together and find the best use of it. So that all the traders can benefit from the right usage.

 

[Engineer]

Thank you Alok,

ALBK is again another stock that is strong on weekly, while daily shows tremendous strength. Try to get in at dips and it will be a sure shot winning trade. A move between 200-190 may be used to get into this flying jet liner.

What is your Outlook about DISH TV for medium term. Buy Hold or Sell this stock.

Thanks brother.

 

[d_s_ramesh]

Welcome Brother, very happy to answer your post after a real long time.

DISHTV is bullish & strong on the weekly. It is trending too. But on the Daily there is weakness setting in. There will be a correction and that will provide an opportunity to go long.

You can preferably add DISHTV to your watch list & track it daily, so that you make the entry in the right time.

 

[d_s_ramesh]

Market hits air pocket, Hourly NIFTY hit stop.

 

[rkkarnani]

Very true rkkarnani,

It would be a nice decision to check the direction of the Index and then select the stock in that direction and if that happens to be a 2 beta stock, then we can expect it to perform twice the level of the Index move.

The negative beta stocks are those which move against the index. As I had written earlier, I think in some other post that BPCL was a negative beta stock and it had a good move last week when index ticked down.

This Weekly Beta seems to be an useful tool, I took the initiative to work on this from the guidance a senior trader gave me. Let's all join together and find the best use of it. So that all the traders can benefit from the right usage.

Okay Ramesh, a new concept for me. I was till now was with a view to use Beta on a Portfolio versus an Index. Seems interesting.

Now how does one calculate the Beta on weekly basis. Hopefully it can be done in an Excel sheet.

So every Friday we get a new value and implement it or rather incorporate it in the coming week in our trading strategy. Eagerly look forward to further inputs. Thanks.

 

[d_s_ramesh]

Beta is calculated using the slope formula in the excel sheet. We take the previous 52 weeks closing price of both the stock and its respective index.

There is one more method using regression, I am trying to do it as there we get some more additional data which I think can be used in the selection process.

 

[rkkarnani]

Beta is calculated using the slope formula in the excel sheet. We take the previous 52 weeks closing price of both the stock and its respective index.

There is one more method using regression, I am trying to do it as there we get some more additional data which I think can be used in the selection process.

So we get to calculate the Beta value of only the components of the Index, say Nifty.
Or for wider choice we can think of Junior Nifty!! Thanks. Learning new things.

 

[d_s_ramesh]

Yes you are right rkkarnani,

I have done industry, sub-sector and Sector indexes combining both CNX 500 and BSE 500 stocks. So this beta calculation on those indices and its stocks will get us the strongest stock in every industry. This is my thought, I have to still work on it.

Any index and its components can be used to derive the Beta values.