Investar Blog – Investing in Indian Stock Market (NSE, BSE, F&O)

Do you trade NSE Futures or Options intraday? Soon, we will be launching our NSE F&O Intraday Beta with 5-min real-time updates for all stock & index futures and options.

Also, our popular Intraday Screener and Scan Alerts will now support all NSE traded futures, so you can scan all NSE futures in intraday as well as daily timeframes for 80 Technical and Candlestick patterns.

This Beta is FREE exclusively for all Investar intraday subscribers, so if you want to get early access to it, go for any Investar subscription with one or more Intraday Add-Ons and get FREE access during the Beta period!

Coming Soon:  A Special Edition of Investar with Nifty Futures and Options intraday and End-Of-Day charts (spot charts are included)! This edition is specially for those traders who trade ONLY in NSE Indices like Nifty, BankNifty, Minifty and Dow and S&P 500 Futures.

So what’s so special about this edition?

• 5-min real-time updates for all the Nifty, BankNifty and Minifty spot, future and option charts!
• All the Standard Edition features (but restricted to all NSE Indices spot, future and option charts).
• NSE Indices continuous futures with automatic rollover when the futures expire.
• End-Of-Day charts with 5 year history and intraday charts with 2-month history.
• At a special introductory cost that is almost half the cost of the full NSE intraday version (with F&O).

Check out these demo videos to see all the features of the Investar Nifty Special Edition.

English Video:

Hindi Video:

Last week the Nifty finally closed on a weekly basis above 5400 first time in 6 months confirming the long-term uptrend. But more importantly, last week, we eliminated the possibility of a sideways trend after the end of the 14-month long-term downtrend signalled on 27th Jan, 2012.  For those who have been following our Facebook Posts, closing above 5400 on a weekly basis eliminates any possibility of a sideways trend and maintains the long-term uptrend that we have had for a few weeks now.

For those who are not following our Facebook analysis, here are the events that have unfolded since the beginning of this year:

1. The long-term downtrend (from Nov 2010) on weekly chart broke on 27th Jan 2012 when Nifty closed above 5200 indicating end of the bear market and possibility of a new long-term sideways or uptrend.
2. Nifty continued to gain on a weekly chart in subsequent weeks breaking the resistance levels of 5365 and 5400, that too on increasing volume, again signs of ‘institutional money’ like FIIs flowing into the market.
3. Nifty finally closed on 17th Feb, 2012 way above 5400 on a weekly chart, eliminating any possibility of a sideways market after the break of the long-term downtrend line on 27th Jan, 2012.

We also strongly feel that we are now at the start of a new bull market. Why is this so?

1. We see rising volume during this uptrend which is a sign of FII money flowing in.
2. Plenty of stocks are going up on strong volume. This is typically a sign of a new bull market.
3. The overseas markets are also doing well, closing at new highs.

Yes, there will be corrections, but they will be more of a short-term nature like in any bull-market. We can almost hear the naysayers giving reasons why this might not be a start of a new bull market:

1. Greece crisis is still not over and Europe is still in trouble.
2. Government is passive and has not done anything to stimulate the growth in economy.
3. Indian Economy is still not in good shape and the valuations of stocks do not justify the ‘run up’ in the market.
4. Budget is around the corner and market is just being driven up artificially just to be brought down later.

But, you see all these naysayers ignore one important aspect, and we’ll write it in CAPITAL letters so that you remember:

• TECHNICALS ALWAYS LEAD FUNDAMENTALS (Attendees of our “Basics of Technical Anaysis” webinars know this)

Most bull markets start when everybody least expects them to. This is mainly because the newspapers, TV and other media are loaded with bearish and doomsday stories, especially because fundamentals are not that strong at the start of new bull markets, and the situation is no different now.

So, what is the best way to trade in this market? Since we now have an uptrend in both short-term and long-term, our strategies have to shift to trending strategies which work best in trending markets. One of the best strategies that works in this kind of a market is the “Volume Breakout Strategy” that we have talked before in this blog.

We’re sure you don’t want to be one of the majority of investors who are part of the ‘herd’ who lose money by getting in at the tail end of the market rather than at the beginning of bull markets like these! The good thing about the “Volume Breakout Strategy” is that you will always find new stocks to invest in, as, at the start of new bull markets, stocks are breaking out of resistance on strong volume everyday. If you are an Investar user, the screener is a great tool to find out such ideas. And if you want to get in-depth training on this, make sure you attend one of our “Basics of Technical Anaysis” webinars, as we cover this strategy in depth over there.

Look out for more blog posts in the future for more ideas on this! And make sure you are following our Facebook page to keep informed about the market and more strategies!

Ever since the breakout in Nifty 2 weeks back, it has been pretty much in correction-mode, correcting from 5350 to almost 5168 on 12th Nov, 2011. This is not what a healthy breakout is supposed to look like. 5165 was the resistance (the top level in the sideways trend from mid-August to 24th October, which was broken on 25th October). On the way down this level is now a support (Attendees of “Basics of Technical Analysis” will recall this as a classic example of prior strong resistance turning into strong support).

Although, the short-term uptrend does not look healthy (and a little broken, in fact, especially on a daily chart) after the Friday’s session, the only saving grace was that it closed above 5165 on both the daily and weekly charts (weekly close is always very important for looking at the bigger market picture). Moreover, the overseas markets (Dow, Nasdaq etc) went up above 2% on Fri raising hopes that the markets will rebound on Monday. Which way the markets will go is anyone’s guess, but one thing is clear. Until the overhang of the Euro-zone crisis is over, the market will keep facing hiccups. From our side, we are a little bullish short-term mainly because the strong support of 5165 was maintained on Friday both on daily and weekly charts, but any close below 5165 on a daily chart would change the bias towards the downside. In the long-term, we are of course still in a downtrend until the long-term down-trend line is broken on the upside on a weekly chart.

And what about the recent volume breakouts? We’ll post about them in a followup post with some thoughts on some  stop-loss strategies.

As we’ve mentioned in a previous post, when a market bottoms out and starts a new uptrend, it is a great time to start hunting for stocks breaking out. What are the scans in Investar that are useful for identifying such breakouts? As a general rule, all the “Volume Gainers” and “New Highs” are a great source of ideas (see screenshot below). Based on the 4th Nov trading session, we have identified a couple of stocks that are breaking out on high volume: RIIL and ONMOBILE. We had also elaborated the strategy and procedure in that post, but just as in other techniques in Technical Analysis, not all breakouts are successful.

So how do you maximize your chances of identifying a successful breakout? Make sure you are following these rules:

1. Make sure the resistance level that the stock is breaking out is very clearly defined. In the screenshot below, you can see that RIIL has a much clearly-defined and strong resistance breakout compared to ONMOBILE where the resistance is not that well-defined. What do we mean by a strong resistance? There are many factors, and one of the most important ones (as past attendees to our “Basics of Technical Analysis” webinar will attest)  is the number of touches made by the support/resistance line. The more the touches, the stronger is the support/resistance. From the screenshot, you can clearly see that the resistance that RIIL breaks out of has many more touches compared to ONMOBILE and hence is stronger. This is not to say that the ONMOBILE breakout will fail but the chances of the RIIL breakout succeeding are higher.
2. Look for signs that a stock has corrected on lowered volume prior to a break-out  (e.g., RIIL had gone up 5 days back and then corrected a bit on low volume). This is similar to the handle in William O’ Neil’s Cup-with-Handle Pattern but may be much shorter in duration. (Remember we are not waiting for a 52-week high to be made, unlike William O’ Neil’s technique).
3. Make sure the volume on the day of breakout is significant (atleast 2-3 times the 50-day average). In Investar (see screenshot) this value is 397% for RIIL which means that it traded at almost 400% or four times the 50-day average.
4. Buy as long as the stock is not too extended beyond the resistance (a max of 2-2.5%). The closing price of RIIL (Rs 429.85) looks like a good price to get in.

Although we have not been updating this blog frequently, we have been regularly posting on facebook and for those who are following us there, know that NIFTY broke out of a sideways trend on Thurs, 27th Oct, 2011, albeit on thin volume because of Muhurat Trading. On Friday, the NIFTY suddenly opened higher and closed at 5360, up almost 3%.

Is it too late to get in because you have been waiting on the sidelines? Here is our take:

As shown in this image, NIFTY had a resistance at 5343, and it closed above that. But, it has a pretty strong resistance at 5400 level and also there is a long-term downtrend line that it needs to penetrate and break before any long-term uptrend can start. Although the market appears to have started a new short-term uptrend, it might be difficult to make money directly being bullish on NIFTY because of it being so close to these strong resistance levels.

What usually happens when the market goes in a new uptrend is that you start seeing lots of stocks breaking out of resistances on high volume over the next few days. So, if you focus on such stocks, you can use a “Volume Breakout Strategy” to identify and get nice gains. At the start of new bull markets (although this is in no way a start of a new long-term uptrend), this works great and can help you identify stocks with 2x to 4x gains very easily. This is a strategy that we’ve adapted from William O Neil’s strategy of trading on “New 52-Week Highs”, which we feel causes you to miss out on getting into some winners early. In this strategy, you are basically trying to buy stocks that are breaking out of resistance on high volume. What you have to do is as follows:

1. In Investar, focus on all “Gainers on Strong Volume” scans and “New High” scans.
2. Based on End-Of-Day, identify sound stocks that are breaking out of clearly defined resistance levels.
3. If they are not too extended (meaning not too much beyond their resistance levels, i.e. within a few % of the resistance level, buy them). Attendees of  our “Basics of Technical Analysis” webinar will remember this as a Buy signal based on “Break of Resistance”.
4. Sell when you get a sell signal based on a support or a trendline breakdown.
5. Hint: If you want to identify stocks breaking out of Daily Charts in intraday,  you should focus on the “Daily Timeframe” scans. For details, see the video: “Using Daily Timeframes for identifying Volume Breakouts”.

We’ve shown the process of looking for such stocks in this youtube video. The video shows e.g., that ABAN has a better looking volume breakout compared to others like JINDALPOLY. Another thing that is clear is that not many stocks appear to be breaking out of sound bases (Usually at the start of a bull market, you will see a lot of stocks doing this). That’s the reason why we feel this is a short-term uptrend, so you have to proceed with caution and put stop losses accordingly.

Today we are uploading several training videos to demonstrate features in our recent March 17 release.

To get the maximum benefit, we recommend that you watch them in this order:

• Analyzing Charts in Multiple Timeframes
• Using the Intraday Screener
• Finding Volume Breakouts with Daily Timeframe Scans
• Using Scan Alerts
• Using the Composite Screener
• Using the Intraday Advisor

For best viewing experience, please view them in Full Screen Mode as follows:

• Make sure you select 720p from the bottom left of the Youtube video status bar (if you don’t see this, it will be visible as soon as you start playing the video).

• Select the Full-Screen Mode to view in Full-Screen.

We are pleased to announce a new release of Investar 2.0 with 15-min,30-min and 1-hour timeframe scans, Composite Screener, many new Fundamental and Technical Scans (both intraday and EOD, based on ADX, Bollinger Bands, TRIX and Stochastics).

If you are already using Investar, no need to re-install, simply re-start the software and it will auto-update.

We would soon be putting new training content on our site and blog to cover the many new features announced. Meanwhile, the best way to get familiarized with the new features would be to go through the QuickStart Tutorial in the software. (You can access it any time by pressing the F1 key after starting the application). This Quick 2-min video shows you how to access the QuickStart Tutorial:

Please note that we have also revised the pricing for the Intraday Screener Add-On. For details see Pricing Plans section. For a limited time, our Annual Edition will be available for the same price.

We will soon be releasing a new version of Investar with lots of new features. Here’s a breakdown in terms of different modules of Investar:

Screener/Scan Alerts:

• Composite Screener (Ability to combine different pre-defined and fundamental scans).
• 15-min, 30-min & 60-min intraday scans.
• A new “Daily” Timeframe scan to help you find new daily highs/lows and volume gainers/losers happening in intraday.
• 12+ more Fundamental Scans.
• 15+ more EOD Technical Scans (ADX, Bollinger Bands etc).
• More Intraday Scans (Stochastics, Bollinger Bands, ADX).
• Favorite Scanning (i.e. filter scrips in your scans using your watchlist).
• Improved Scan Alerts (with ability to filter by timeframes and persistence).
• End-Of-Day Scan Alerts.

Charts

• Intraday history now available for 2 months.
• 10 more drawings (Fibonacci Extensions, Fibonacci Fans and more).
• 3 new indicators.
• Technical Advice based on 15-min, 30-min and 60-min timeframes.
• Horizontal Levels for indicators.
• Improved trendline drawing with snap-to-price extension.
• Ability to change high/low color of bar chart.

Portfolio

• Easy Multiple Client ODIN/Neat Import (for Portfolio Managers).
• Export Portfolio Holdings, Transactions & Profit/Loss Analysis to PDF, Excel, Word and many other formats.
• Portfolio Performance Report.

Others:

• Printing Support.
• And many more.

Over the next few days I will be blogging about some of the features and also holding webinars to demonstrate some of the key features that can help you improve your trading.

Do you own a Nokia smartphone? Do you want to keep track of your NSE stocks on the move. Then take a look at our Investar Streamer now available in the OVI Store. Here are its features:

• Maintain multiple watchlists
• Stock Prices auto-refresh every 5 mins.
• Watchlist persistence (i.e. Watchlists persist across application restarts).

Not sure if it is the right app for you? Try our FREE version first and then decide if you want to go for it. For a limited time, Investar Streamer is available for Rs 25 for one year in the Indian sub-continent ($0.99 in US, 1 pound in UK etc).