Reliance hits 1200 with Jio charger!!

Reliance Industries Ltd (RIL) has hit 1200 today, making 8 year high, on the back of positive news from Reliance Jio, which has got 100 million customers in less than 6 months! With Jio, Reliance is transfporming into a digital technology company in addition to being a leading energy and petrochemicals company. And we like this journey because this is the “Tech century” and Jio is creating a very large digital platform, which includes telecom. In fact, Telecom companies worldwide need to transform rapidly to survive because the Internet is breaking their conventional business models of high margin. Reliance is one of our main stocks across all markets, and one of the safest stocks for trading and long term investing. But it has gained 11% today and closed at 1208, gaining Rs 120 in a single trading session today, and now its movement is very uncertain. It could be due to major scale short covering because these levels are unseen in Reliance in last 8 years. We have been long on Reliance and have also advised our traders/clients to stay long. Our first major target was 1150, which was hit today. The next target is 1220, which may come tomorrow on Thursday, 23 Feb 2017. The fact that we are currently on second last day of Feb 2017 F&O series also added to the big move as short covering by call sellers was evident in the initial 1 hour.

One thing to note is that Reliance stock has not been able to hold on to any large gains in the last 8 years, while buyers promptly come to buy at lower levels, there is no conviction at higher levels, and today’s sudden 120 point rise may or may not hold. If the trend of last 8 years were to prevail, Reliance will go back to 1050-1100 in the coming weeks, eroding all the gains of today. However, if today’s move is a trend changing move, then it could mean 200-300 points upside in the coming months.

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Asian Equity Markets Review – 20Feb2017

Asian equity markets ended mostly higher on Monday as the Yen weakened after Japanese trade balance figures missed expectations, and oil prices held steady after posting their first weekly decline in five weeks on concerns over rising production and swelling stockpiles in the US.

Reports showed that Japan posted a merchandise trade deficit of 1,086.9 billion yen in January as exports slowed down due to a decline in US exports and the timing of Chinese New Year holidays. That missed forecasts for a shortfall of 625.9 billion yen following the 640.4 billion yen deficit in December.

Chinese shares ended higher after reports that pension funds are entering the stock market. Investor sentiment was also boosted after China’s securities regulator unveiled new rules on Friday restricting excessive and frequent fundraising by some listed companies. Continue reading

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SP500 vs Bonds- Jaws of Death?

This kind of diversion between equities and bonds usually does not end well for equities. The above chart plots S&P500 index vs Vanguard Total Bond Market ETF (NYSEARCA:BND). The divergence starts from Nov 2016 and appears to be peaking out.

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