Today, both RELCAPITAL and NTPC just traced the NIFTY index. RELCAPITAL diverged around 12.30pm to rocket to a 6% gain. I did not expect this! ICICI Direct gave a buy recommendation on RELCAPITAL in the morning. This surprised me. But, just to be cautious, I closed my positions at 354. Then, as per their recommendation, stock went up to 361. Till then, it was just tracing NIFTY. So, I thought, the weekness will show up towards end of day and hence this can be again sold into. So, I sold it again at 361 to make an intraday profit of 7 pts (Rs. 3500). Then was the shocker... it raced to 369. Still all experts claim this as short covering rally and this must be sold. I have two questions: Why did owners wait till this point to cover their shorts? They could have done it long back. Was there any indication of a break-out? How could ICICI get this on their buy calls? The result season should be nearing and there must be something good here!?
As planned before, I expected NTPC to follow nifty and hence booked profits at 168.60.
See that relcapital volumes are just about the monthly average. This tells me that it was the day traders and fresh long-buyers who have taken this up. If this was a short covering rally or something that the short term BTST traders are playing for, this stock should go strongly negative tomorrow. I should wait till 3pm tomorrow and then exit if this stock is still running upwards.
Now, I stand dangerously with a short sell position when both market and this particular stock are rallying upwards. I need to think this and improve my strategy. Moreover, I am close to the 7k loss limit rule and I have to hope that this does not open gap up.
AT EOD:
NTPC = Closed with Rs. 2800 profit (-450 for brokerage and taxes).
RELCAPITAL = Open with loss of 6.5k (+900 for brokerage and taxes).
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