4950-5090 on Nifty seems to be the range as of now... People sitting on cash can now start deploying it but in a staggered and pyramid manner

Use this fall of 10-15% in Nifty if and when it happens to build a portfolio and that too in a smart manner. This strategy is useful because u get to buy stocks or ETFs at important support levels. The best thing about this pyramid startegy is that the net acquisition price of the Index will much lower than in case of simple averaging.





Now let's take an example:

If there is some person Mr. X and he wants to invest 1 lakh ruppes in current scenario. We would look at his returns in both the cases.

In the case of Pyramiding:
He invests Rs20000 at 4950 (20%).
He invests Rs30000 at 4750 (30%).
He invests Rs50000 at 4450 (50%).




Then the cost of acquisition comes out to be 4640

In case of Averaging:
He invests Rs33333 at 4950 (33%).
He invests Rs33333 at 4750 (33%).
He invests Rs33333 at 4450 (33%).

Then the cost of acquisition comes out to be 4716.


So its clear that acquisition price in Averaging ( 4716 ) is 1.6% higher than in the Pyramiding (4640).

So Pyramiding will give jump start return of 1.6% which simple averaging method cant give.

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Nifty trading strategy for extreme short term:

Buy Nifty above 5040 for targets of 5080-5090.

Sell Nifty below 4980 for targets of 4930-4950.



Stock View: Liberty Shoes

After the drastic fall in Jan 2008, Stock bounced back but was not able to close comfortably above 110 level. After Jan 2008 stock tried to cross 110 level but it failed 5 times. Now the stock is a buy at current levels and on dips to 106-107 for targets of 140 and stop loss for all trades should be kept at 100.



Have a nice trading day

Regards

Ankit