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Nifty

Best & Worst Performing Nifty stocks

The best 5 performing Nifty stocks for the year so far (30 Dec,2011- 25 May, 2012):

BPCL: 52%

TATA Motors: 50%

AsianPaints: 45%

IDFC:36%

RelInfra:36%

The worst 5 performing Nifty stocks for the year so far (30 Dec,2011- 25 May, 2012):

Infy: -15%

Bharti Airtel: -13%

BHEL: -12.8%

GAIL: -12.2%

NTPC: -12%

Categories
Nifty

Watch out below

In an earlier post,I had mentioned the importance of the Nifty breaking its 200 DMA.

Now that Nifty has finally broken its 200 DMA, watch out below !!

Categories
Nifty

Nifty in terms of Gold

If I were to ask you, how well did the Nifty do in this century, your answer would be quite well.

Nifty closed at 1528.45 on 31st March, 2000.On 30th March, 2012, it closed at 5295.55.This represents a gain of 246%. A nifty gain by the Nifty you would agree.

But this is only one side of the story.

The performance of the Nifty in terms of a hard currency like Gold takes a different hue all together.

In March, 2000, one Nifty could have bought 3.95 grams of gold.In March 2012, one Nifty can buy only 1.94 grams of gold.(see chart below)

So the gain by Nifty wasn’t so nifty after all !

 

Categories
Nifty

Nifty below its 200 DMA.Should we care?

Nifty is hovering around its 200 DMA of around 5152.

The 200 DMA holds a special attraction for market observers and technicians.

Typically, if the index goes below 200 DMA, it indicates bearish times ahead and if it goes above 200 DMA, it indicates bullish times.

Is this backed by research/empirical data?

The short answer is YES.

Mebane Faber is the co-founder and the Chief Investment Officer of Cambria Investment Management.

He has authored an excellent paper titled “A Quantitative Approach to Tactical Asset Allocation”

This paper is a must read for all market observers.In this, a timing approach is compared with a simple buy and hold approach.

In the buy and hold approach, the investor simply buys the index and holds it thru thick and thin.

In the timing approach, the following simple rules are followed:

BUY RULE

Buy when monthly price > 10-month SMA.

SELL RULE
Sell and move to cash when monthly price < 10-month SMA.

The paper demonstrates the superiority of the timing approach over the buy and hold approach

The catch is effect of commissions,impact costs etc is ignored while computing the returns.In the long run, I am sure they will make a difference.

But the fact remains that avoiding the markets when they fall below the 200 Day DMA enables one to sit out the worst of the bearish times.

Categories
Nifty

Nifty Seasonality

Came across this research paper on the NSE website (see paper here)

The paper studies the effect of seasonality on Nifty and Nifty Junior.

Their conclusion?

The study found that daily and monthly seasonality are present in Nifty and Nifty Junior returns. The analysis of stock market seasonality using daily data, we found Friday Effect in Nifty returns while Nifty Junior returns were statistically significant on Friday, Monday and Wednesday. In case of monthly analysis of returns, the study found that Nifty returns were statistically significant in July,September, December and January. In case of Nifty Junior, June and December months were statistically significant. The results established that the Indian stock market is not efficient and investors can improve their returns by timing their investment.