Some NSE Data Backtests & Possible Scenarios

The NSE website, although sometimes laggy and devoid of any data at all for particular securities, is indeed helpful for testing strategies. I was pondering over the delivery volume percentage data and the relative changes in prices of the particular stock. It can be seen that two possible situations are arising: 

- Whenever the equity delivery percentage is greater than roughly 65%, on say day 't', there is a spike observed in the price on the day 't+1'. This is the most likely case observed.

- The other possibility is the stock price spikes on the day 't+2'. 

- Of all the cases observed, there had no need to be worried about holding the stock.

I was going through the data for Emami Ltd, Birlacorp, DBCorp, Sun Pharma, and Eveready Industries and it seems that most of the time the hypothesis holds true. 

[26-05-2023] Trades Done

Some of the trades I did on 26-05-2023 are given below. The same delivery volume percentage criteria were used for selecting the stocks. 

Profits Booked in: Sun Pharma, Eveready, Cupid

Losses Booked in: Emami Ltd, Redington

Holding: M&M, Birlacorp, Fortis.

Some Learnings: 

- The taxes are significant, a bit of patience while holding the positions can help. Apart from this, the spikes usually occur after 2 PM, so there's a good chance that the stock will stonk towards the end of the day. 

- Do not buy stocks at peak. Stocks that are close to the previous day's close are safer bets, it seems. 

Volume Day Trading

One of the methods I'm currently experimenting with is the equity delivery volume percentage and assisting it with basic technical analysis. I was in Indore, Madhya Pradesh recently during my summer vacation and learned the same technique from my mama ji. 

The basics of a BUY signal are:

- Delivery Volume Percentage (DVP) > 65%

- LTP > Rs 100 (Basically any share above Rs 100)

- High volume overall can also help. 

These can be assisted with technical analysis such as basic bullish or bearish divergences on RSI, Stochastic RSI, or MACD (which can be seen on Zerodha KITE). 

SELL: As I followed my mama, most of the trades he used to close at around +500 Rs. A spike in price usually is seen during the day, when the positions can be closed. Although the sizes were significant, it is comparatively less volatile and riskier than options trading. If implemented correctly, can help generate consistent daily profits. 

- If the stocks are good enough fundamentally, these can be held for a longer period too, with less risk of losing much money. 

First Day in Commodities!

I explored the commodities market, it has a lot of varieties too. You got gold, silver, crude oil, natural gas, and agri products. I have been studying moving averages and found that the 5 EMA (Exponential Moving Average) & the 20 EMA, have usually shown good crossovers for entries and exits. Another thing I saw in the commodities market is that prices largely follow a particular trend rather than being too volatile. I'm unsure if it is the daily scenario in the market or just a special day. Although there was news floating around on ET, that US recession fears around the world are fading due to which crude oil prices are going up. It mentioned, that in the previous three weeks, the prices fell as a result of the fear.

As I write this article, I see crude oil prices falling. One reason to be happy about this is that I do not have any open positions right now. I took two trades during the daytime, which fetched me a gross profit of 14.18% return on capital (i.e. ₹ 5500), including the charges (IC). Honestly, it really hurts to pay such huge amounts of brokerages, Rs 20 per order piles up to become monstrous amounts!

Another trade that I took was longing on NIFTY50. I earned around Rs 663 in that trade, ~ 6.89%. Overall, the sum total rough amount earned today was around Rs 1443 IC.