Lupin - what the badshah of dala street, Mr. Rakesh Jhunjhunwala did in FY 2016

We all know that Indian Warren Buffett, Mr. Rakesh Jhunjhunwala has a major investment in the Lupin. So I was curious to check whether he appears in the top 10 investors list. I took the annual report of Lupin for financial year 2016 and checked the section 'Shareholding pattern of top 10 shareholders" on page 93, there his name appears at the top holder. Next thing that I did was to glance at a page long transaction list of his trades.

My curiosity lead me to see what happens when Rakesh Jhunjhunwala buy or sell (small quantity) of his holdings in the market. Will he buy exactly at bottoms and sell at the peaks? Or he is also like any of us who will buy at the top and sell at the bottom? Or it is just random.

So I took all his trades from the annual report and plotted them on the price chart. Left hand axes represent the price while the right hand represented the quantity of his trade. Stars appearing above the Red horizontal line are the buy and below the line are the sells.

Now the analysis and interpretation of this .... well I'll leave it to you.

If anyone needs the data in a excel sheet then you can let me know and I can share the same.

Nifty intraday 26-08-2016

Our earlier views on Nifty about the triangle formation became invalid. I'll write a detailed note on this one over the weekend (Impact of the per-conceived notion on the Elliott wave analysis )

The fresh look at the hourly chart shows that we are either in 'C' of the 4th wave or on the 3rd wave of the bigger fall. For now we will go ahead and perceive the 'C' wave and will look into the 3rd wave possibility only if this wave does not end near 8410 region.

Nifty hourly chart:

The Halo Effect:

An article by JASON ZWEIG

"

In both cases, what psychologists have christened the "halo effect" was at work. In this quirk of the human mind, one powerful impression spills over onto our other judgments of a situation. The effect was first documented in the U.S. Army decades ago, when soldiers who earned high scores from commanders for one quality (such as neatness) also got high marks for entirely unrelated qualities (such as loyalty and physical strength).

Halos can be cast by many aspects of a company. Consumers who know a firm is highly profitable are more likely to believe its products are high-quality and its advertising honest. That helps build loyalty among customers, making companies more resistant to competition. And if you love a company's products, it is natural to conclude that it has superior management, too. 

"

He goes on to write the following to overcome halo effect while analysing a business/stock:
"

You can adapt a procedure described by the Nobel Prize-winning psychologist Daniel Kahneman—who is widely admired for his insights into decision-making—in his forthcoming book, "Thinking, Fast and Slow." Start by identifying a handful of objective factors that you believe can predict superior returns. You might, say, include low debt as a percentage of total capital, stable earnings growth, high return on equity, low price relative to earnings and a history of raising prices without losing customers.

For any prospective investment, rate each of these financial factors on an identical scale—say, from 0 at the bottom to 5 at the top. Then add a final, subjective factor: your overall intuitive impression of each company and its management, rating them on the same scale. Finally, total all the scores and divide by the number of factors; the company with the highest average is the one you should favor.

"

Detailed article can be read here.

Infosys EOD 25-08-2016

Elliott wave analysis of Infosys we saw that a 5 wave down move was ending (earlier analysis can be found here). Further to that Infy seems to have done a small 5 wave upmove followed by 3 wave decline today.

Infosys Elliott Wave analysis on 1 min chart:

Nifty EOD 25-08-2016

Nifty 1 min chart shows clearly how this a-b-c up move has played out. This over shoot the triangle trend line, just to complete the 'D' wave. And return back into the trend line, indicating the false breakout!

Nifty 1 min chart zoomed in:

Nifty 1 min chart showing the entire triangle formation:

Now let us step back and observe the hourly chart and hourly 9 RSI chart:

 Nifty hourly chart with 9 RSI
We can observe the triangle pattern in the RSI data as well!

Nifty intraday 25-08-2016

Nifty hourly chart shows a possible triangle completion. Current upmove from the low of 8590 appear like the next leg of the up move, a part of the 5th wave up. This has a potential to go up near 8880 range. However there are lot of resistance clusters above 8700 range. Today being the expiry day, market may swing dramatically in either direction!

We need to closely observe the breakout region near 8660 - 8680 range. If comfirtably moves above this then the breakout is confirmed. It may also spend more time in the region resting on the downward sloping upper trend line of the triangle in a pull back. However moving below 8650 will be a concern for this breakout.

Nifty hourly chart with Elliott Wave analysis:

Nifty hourly chart with 9 RSI:

Nifty end of the day 24-08-2016

Nifty after completing a complex correction involving abc-x-abc has moved swiftly in 5 wave form above the channel line starting at 2:07 pm. At the closing Nifty has completed a minor 5 wave up move followed by a minute 5 wave down move which represents wave 'a'. Then a very small 7 point upmove. This could be wave 'b' or it might still be going on tomorrow morning at the opening.

Two options can be seen at the opening tomorrow:
1. A very small upmove which should be contained below 8659.90 (beginning of the down move) then a swift down move may follow. That will complete the correction for the rise from 8620.90 to 8659.90. Then further upmove may commence.

2. A very swift down move which may go near 8642 which is 61.8% fibonacci extension or 100 at 8636.  That will complete the correction for the rise from 8620.90 to 8659.90. Then further upmove may commence.