The Indian stock market has had a stellar run for most of the previous financial year (2021-22). Although the global economy continues to battle rising inflation (only worsened by the Russia-Ukraine war), the BSE Sensex still outperformed every other major Asian economy in the last year.

FY23 sure looks tricky–thanks to the ongoing uncertainty amid the war, rising commodity prices, and inflation that seems more persistent than transient.

Here’s our guide to navigating the markets as a trader in FY 2023:

 

Keep your eyes on inflation

Source: Economic Times
Inflation is likely to define the next financial year. Concerns about rising prices have been on everyone’s mind lately. And why not? Consumer prices have risen fast in a relatively short time, not only in India but across the world. In 2022, India’s CPI rose above 6% largely driven by a rise in fuel and food items.

Traders should keep their eyes glued on inflation numbers during the next year, since these numbers may force the central bank to raise interest rates and also affect consumption and margins, impacting earnings dramatically.

 

Watch out for Post-Pandemic Stocks

Likely, the worst of the coronavirus pandemic is over in India. The vaccination rate has picked up. Further, the vast majority of Indians have received at least one dose. In this scenario, the Indian economy will attempt to reach pre-pandemic activity levels. This is owing to the deferred or consumer pent-up demand.

Several sectors that underperformed during the pandemic may see a resurgence. For example, airline and hotel stocks may emerge as big winners in the coming financial year.

Other sectors that may do well post-pandemic include the consumer goods and hospitality sectors. Traders may find opportunities across these sectors. This is especially true if there are clear momentum and trends over the short to medium term, (significant for swing traders).

 

Watch out for changes in the geopolitical landscape

Traders need to keep a close eye on developing world events since they have a significant impact on the direction of the markets.

The ongoing Russia-Ukraine conflict has already thrown the global financial markets off-balance. For example, oil and natural gas prices are soaring high. Such situations can benefit smart traders who use derivatives in their favor.

Such events take place often, and it can be relatively straightforward to predict price movements based on such events.

 

Commodities – Will they ever come down?

Covid-19 sent supply chains into a tizzy and made it harder to maintain established logistical practices. This has led to tremendous shortages of various commodities. The Russia-Ukraine conflict has also caused a shortage of commodities, such as crude oil, natural gas, wheat, copper, and aluminum, adding further pressure to commodity prices.

Source: Investing.com

Traders exposed to commodity prices via F&O should focus on events that are likely to have an impact while ignoring the noise.

 

Are we staring at a recession?

There is an elephant in the room we cannot ignore—a part of the US treasury yield curve inverted, stoking recession fears for the US economy. Every recession in the last 40 years or so in the US has been preceded by yield curve inversions.

Source: Market Watch
Fed officials did not rule out aggressive hikes amid inflationary pressures. This has made higher yields and flatter curves the momentum play at present. The yield curve is likely to flatten further with expectations that the Fed will hike rates fast enough to risk a slowdown in growth. Yet, Fed Chair Powell said that the focus must remain on the shorter end of the curve, where it remained steep.

 

So, what will it be, FY23?

We can’t solve this puzzle yet, but we can say this:

Traders will need to keep their eyes open for geopolitical developments, their impact on markets and commodities, the response of central banks, the state of the global economy as well as primary market activity.

A lot can happen in FY2023 (including the LIC IPO!). Remember, trading is always tricky even during the best of times. A savvy trader should keep an eye on all the factors that may affect prices from the intraday and long-term perspectives and trade accordingly.

Further, it’s best to prepare for the worst when it comes to the markets.

With PHI 1’s backtesting and advanced risk controls, you can equip yourself to deal with any market scenario head-on.

Explore the power of preparedness with PHI 1’s automation.

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Did you know that around 92% of the trades in the global forex market come from automated algorithms? Yes, the price movements in the largest and most liquid financial market in the world are primarily the result of automated trading strategies.

Automated trading or algorithmic trading first started gaining popularity in the early 2000s and has now become super popular. A custom trading system is a way to automate your trading activity based on your desired or customized conditions and rules.

Custom trading systems are quickly becoming the primary way in which retail traders, mutual funds, and financial institutions conduct their trading activity.

Here is everything you need to know to get started.

 

Custom Trading System – What is it?

A custom trading system is essentially an algorithm. You can program the algorithm to enable it to trade precisely in the way that you want. For example, if you want to purchase stocks when their moving average rises to a certain number when they exceed a certain volume, you can just provide the instructions to the algorithm and it will do it for you.

This customized system can be as simple or as complex as you need it to be. You can instruct the algorithm to trade based on 20 technical indicators and factors, or you can ask it to trade based on 4 indicators.

As the name suggests, a custom trading system can be completely modified. It can also be reprogrammed as many times as you want. You can keep making changes to it until you’re completely satisfied with the result.

 

Should You Buy or Build a Custom Trading System?

There are several factors that you should consider before making this decision. It depends entirely on your goal, experience, and resources. Buying a custom trading system can provide a good way for you to start algorithmic trading.

If you are unsure about the parameters that you should use to build a custom trading system, then it may be a better idea to buy a tried and tested custom trading system.

However, if you’re experienced in trading and need a custom trading system that does exactly what you need it to do, then building a custom trading system is the better option.

Building your own custom trading system can be more time-consuming and heavy-on-the pockets. However, the rewards of building one from scratch can be significant. If you have the required vision and a trading strategy honed from years of experience, then building such a system makes more sense.

 

Who Should Opt for a Custom Trading System?

Custom trading systems are a good idea regardless of whether you’re a retail trader or an institutional trader. With advances in technology, building a custom trading system is now accessible to everyone. There are several platforms out there that will provide the tools that you need in order to build your own custom trading system.

It is important to note that the success of a custom trading system depends entirely on the instructions that you give it. Hence, if you’re a new trader or don’t have the necessary knowledge or experience, then having a custom trading system may be too early for you.

Instead, you should focus on building your manual trading skills, until you have the required know-how of building your own automated system.

You do not need to have advanced programming skills in order to make a custom trading system, however, you do need a sophisticated knowledge and understanding of trading securities.

 

Pros and Cons of Custom Trading Systems

We’ll discuss the cons first, to get them out of the way.

A custom trading system is not a set-it-and-forget-it system. Developing a custom trading system takes time, and there is a learning curve. You should start with small order sizes while you refine the system until it is satisfactory.

Further, even once you have the right strategy, you will still need to monitor the software. This is because an algorithm may develop faults and errors that need to be rectified. You may lose your Internet connection or some other technical issue may cause the algorithm to malfunction or be rendered inoperative.

Now for the pros.

A custom trading system allows you to keep your emotions out of the way. Algorithms trade exactly the way that they are programmed to, regardless of how humans feel. A custom trading system is also much faster than humans. It can execute trades in a fraction of the time that it would take a human trader to react.

Further, once you have a successful custom trading system in place, 90% of your work is done. You can sit back and distantly monitor the system while the system does the work for you.

 

What Do You Need to Get Started?

You just need two things to get started and build the custom trading system of your dreams.

You will need a trading strategy that works for you and can be programmed into a custom trading system. You will need to provide the “rules” based on which the trading system will operate. Hence, if you’re a new trader, then you will need to spend some time in order to develop your strategies to a level where it can be automated.

You do not need a perfect strategy. That does not exist. However, you do need enough to make a start. You need to program the stop-loss triggers, the buy triggers, the sell triggers, the degree of volume, and so on.

Next, you will need an algorithmic trading platform. This service provider will provide the software on which you can build your custom trading system. Usually, the software will come with its own “wizard” in which you can enter the numbers and figures that you want the algorithm to operate with.

However, if you want greater flexibility and customization, then you will need to work with the developers to develop your own software. This method can be more time-consuming, but the rewards can be high.

 

Which Platforms Support Custom Trading Systems?

There are numerous platforms available in India that provide custom trading systems. Each of these platforms has its own pros and cons. Hence, you need to do your own research to figure out which platform suits your needs the most.

Here are some of the most prominent examples:

1. PHI 1: PHI 1 is an all-in-one tool that can take care of all your custom trading system needs. This tool aims to balance flexibility with ease of use. You only need a basic understanding of the Python programming language in order to use this tool and it provides more than 120 technical indicators built into the system. PHI 1 will also create a system for you. More on this later….

2. MetaTrader 5: MetaTrader 5 is one of the most widely used tools for trading. It also offers certain algorithmic trading features. You can use a specialized development environment called MQL5 IDE to develop your system.

3. Ninja Trader: Ninja Trader is primarily a brokerage service that has its own trading platform. The trading platform caters to both manual trading and automated trading activity. The automated trader comprises the SuperDOM tool which allows you to customize your trading.

 

What kind of Pricing can I expect for a custom trading system?

The pricing can vary significantly depending on the platform that you use.

Some automated trading platforms offer a subscription-based service. You pay a fixed monthly sum in order to use the platform.

Other automated trading service providers, such as PHI 1 also provide a custom quote based on certain factors. These factors include the number of hours required to build the custom trading system (PHI 1 will build the system for you, so you don’t have to worry about the programming), the maintenance cost of the system, and the server cost.

 

Challenges with Custom Trading Systems

The biggest challenge that you will face while building a custom trading system is which technical indicators and tools to use. It is not easy to automate trading activity in such a way that it does not require human input. It will take time and effort to build such a system, however, it will be worth it.

Depending on the service provider that you choose, you may also need to hire a programmer or developer to take care of the coding for you. Some custom trading systems do not require any prior coding knowledge, but these systems offer very little flexibility and customization.

 

How PHI 1 Helps Build Your Custom Trading System?

PHI 1 has been built from the ground up keeping your algorithmic trading needs in mind. The custom trading software that PHI 1 offers is completely customizable, and PHI 1 works with you in order to develop it in exactly the way that you need it to be.

If you’re looking to purchase a trading system, then PHI 1 offers three pre-built systems that you can choose from. These are:

1. A tick-by-tick system
2. A pine script strategy for signal generation + custom reporting
3. A combined tick and candle-based tool with technical indicators.

PHI 1 offers ad-hoc and pre-packaged services that can help you build a system that can take your trading a notch higher.

Get in touch with us for your very own custom trading system

Intraday trading has received a boost in India after the onset of the coronavirus pandemic. In January 2021, the Central Depository Services (CDS) oversaw the opening of more than 1.4 million accounts which is a new record.

2021 has been an exciting ride for the Indian stock market, giving plenty of opportunity to traders to make profits. However, it also gave us some important learnings.

Here are three important intraday trading lessons that the markets taught us in 2021.

Minimize Your Losses:

Once you discover that the market is refuting the idea behind your
trade, you should cut your loss-making trades as soon as possible.

For example, the markets declined on December 21st once the news of the Omicron variant spread. Almost every trader shorted stocks in anticipation of a sustained fall in the markets.

However, unexpectedly, on the next day, the markets recovered instead of declining further. This is a great example of how you should closely monitor trends and actively cut losses rather than stick to fixed ideas. After you are certain that the trend of the market has changed, you should change your bets accordingly.

Follow Your Trading Rules:

As a rule of thumb, intraday traders should always abide by the rules they set for themselves. This not only helps you stay calm in difficult situations, it also guides you on the next step.

For example, having a stop loss is a rule followed by almost every trader. When Star Health’s stock fell 13% in a single day (15th December), sticking to the stop loss would have helped cut losses.

Yes, there are scenarios when it is better to break your own rules, but it requires a lot of experience to identify such situations.

Avoiding FOMO and Doing Your Own Research:

A lot of traders depend only on market hype to make trading decisions. This can lead to negative results. For example, the PayTM IPO was highly hyped but PayTM stock did not perform well and PayTM stock price is still trading at a significant discount from its opening price.

You should always monitor market trends and hype, however, this should not be the only factor on the basis of which you make your trades. Your trades should be backed by proper research and analysis regardless of the hype.

Don’t Be Greedy:

It’s important to know when to book your profit. Holding on to profitable positions for too long can be counter-productive. For example, several traders who went long on IRCTC shares failed to book their profits before the IRCTC share price began to enter a bearish phase after 18th October. The same can be said for the Bitcoin crash after prolonged bullishness.

How do you know when it’s time to book your profits? Once the stock reaches the target that you set for it before entering the trade. You can also use an up-from-cost strategy to determine when to book profits.

Select the right platform:

All things said and done, you don’t want a bad software ruin a good trade. Make sure you choose a software with minimum downtimes and glitches in the middle of a trade. (Hint hint: Try PHI 1 for free!)

Let’s begin 2022 with some hard lessons learnt in 2021. After all, you can only become a better trader by learning from your mistakes.

The Indian stock market has had a wild wild ride in 2021. From uncertainty caused by the coronavirus pandemic to a huge number of IPOs, the Indian market saw it all.

While there is no shortage of in-depth market analysis, there’s always more appetite for humour. We’ve compiled a list of some of the best market memes for 2021, which will help you make sense of the year that has gone by.

1. PayTM sell-off by anchor investors:

Despite all the hype surrounding the PayTM IPO, the stock failed to do well post-listing. The company’s value declined on its debut, and has since recorded a fall of around -35% since it started trading. PayTM’s woes were compounded when several anchor investors sold their stock in the company once the mandatory lock-in period ended. The stock fell around 13% in a single day on 15th December thanks to the lack of investor confidence.

2. High Demand for IPOs:

While there were a huge number of new listings this year, there was also a high demand for them in the primary market. People rushed to subscribe to IPOs, but not all those applied got an allotment. For example, the Zomato IPO saw an oversubscription of 38 times as of July 16th. Needless to say, there were a lot of investors left “hungry”.

3. Surge of interest in Bitcoin and other Cryptocurrencies:

Cryptocurrencies are famous (or infamous) for being highly volatile. Over the years, investors in cryptocurrencies have gotten used to the fact and anticipate the volatility. In 2021 alone, the price of Bitcoin has gone from $23,379 to $68,925. The cryptocurrency is currently trading at around $51,108. This meme is the perfect depiction of cryptocurrency investors react to this volatility – no reaction at all.

4. Tata Motors’ Bull Run:

Tata Motors surprised everyone this year. On 29th March, 2020, the company’s stock was trading at Rs. 65.3 while today it is trading at around Rs. 467. Needless to say, the stock has made its investors rich. However, this was a missed opportunity for many investors who couldn’t predict the stellar performance.

5. Flat Performance of ITC:

ITC used to be a darling of investors just a few years ago. The stock gave consistent returns and kept investors happy. It was one of those blue-chip companies that was a part of almost every investor’s portfolio. However, the company’s recent lackluster performance has gotten it into trouble with disappointed investors. The company’s has delivered returns of just around 5% over the past year, which does not even beat inflation.

And the list goes on

If you’ve enjoyed these market memes, here are a few more that we created only for you.

That’s all folks!

Remember to carry your sense of humour while you trade into 2022!

Remember to better your trading performance with PHI 1 – the all-in-one best algo trading software.

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The Indian stock market has had a strong bullish run in 2021 driven by factors such as heightened economic activity, high liquidity, and strong earnings growth. However, this doesn’t mean that the market didn’t have its share of surprises in the year.

In 2021 so far, the Sensex has gained 26.4% while the Nifty has gained 29.6%. An analysis of the sector-wise performance of the Indian stock market showed that certain sectors in the market such as information technology, real estate, and healthcare, performed better than others. Overall, investor sentiment was positive, pushing prices further up.

Continuing our Market Round-Up series, in this article, we discuss five surprising major events that affected the stock market in 2021 and shaped the year’s stock market performance.

 

1. Covid-19 Second Wave

It would be fair to say that the intensity of the second wave left everyone in India and the world shaken. The spread of the second wave caused intense downward pressure on the stock market.

Between February 19th to April 16th, the S&P BSE Sensex corrected by 9.8%. However, the markets proved far more resilient than expected and the Sensex went on to hit a high of 62,245.

 

2. IRCTC Boom and Crash

IRCTC was having a stellar run in 2021, hitting a record high of Rs. 6393 and taking the overall market capitalization of the company to over Rs.1 lakh crore on 19th October.

However, the stock came tumbling down (around 38% in five days) because of heavy profit-booking caused by the stock being placed on a temporary F&O ban list by the NSE.

The stock faced another crash of 15% on 29th October when the Government announced that it would be taking a share of 50% of the convenience fee revenue of the company. However, this announcement was later withdrawn.

 

3. Cryptocurrencies

Cryptocurrencies were even more volatile than usual this year. Prices of Bitcoin plunged more than 30% in 24 hours (on 19th May) caused by unfavorable tweets by Elon Musk and the announcement by the Chinese government banning financial institutions from providing cryptocurrency-related services.

But as they say, the very hallmark of cryptos is volatility, Bitcoin and the likes shall always be rollercoaster rides, mirroring the extreme uncertainty the world faces.

 

4. Fiscal Deficit

The Budget is always expected to affect the stock market, and it does. However, this year marked the best intraday performance of the Nifty on a budget day since at least 1996.

On budget day, the Nifty soared 4.7% while the Sensex made gains of 2,300 points. One major factor that contributed to the optimism was the fiscal deficit target of 6.8% which was the highest since 1994.

Higher fiscal deficit means that spending on critical issues such as housing, infrastructure, and healthcare would be higher.

 

5. ITC Spike

ITC is such a giant in the Indian stock market that any price movement is watched and noted by investors. While ITC had been continuously underperforming, on 16th September, ITC witnessed a surge of 8.1% in intraday trading.

This sharp spike was caused by reports that the Indian government would allow greater foreign direct investment in the tobacco industry, a sector that provides around 48% of the company’s revenue. This was also taken quite jovially by traders who celebrated the uptick with much-liked memes across social media.

In conclusion, in 2021, the Indian stock markets prevailed over the effects of the pandemic and the resultant lockdowns. Even though the GDP of the country has contracted this calendar year, the performance of Indian stock market has been bullish, thanks to the anticipated resumption in growth.

Surprises and volatility may be seen as an evil, but it’s not necessarily so, especially for traders.

Perhaps, riding through volatility with proper risk controls is what separates successful traders from the lot.

Explore advanced risk controls, automated trading strategies, bulk backtesting and more on PHI 1 – the all-in-one trading platform that can take your trading up a notch!

Enjoyed the read? Watch out for our next article in the 2021 Market Round-Up series.

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2021 has been a good year for the Indian stock market and for IPOs in particular. There were 51 IPOs that took place during the year. 38 of these stocks are trading above their offer prices, of which 15 have more than doubled in value from their offer price.

Overall, the amount of money raised through IPOs so far in 2021 has been more than 1.08 lakh crores. Some companies that went public this year include Nykaa, Sona BLW, MTAR Technologies, Nazara Technologies, India Pesticides, Shyam Metalics, and more.

In our first article of our 4-part Market Round-up 2021 series, we discuss the IPO performance of some of the most prominent companies since their 2021 IPOs.

 

Zomato

This company needs no introduction. The company started out as an app for exploring & posting reviews of restaurants and they have turned into one of the biggest food delivery services in India.

Zomato had one of the most successful IPOs in 2021. It was also the first Internet company IPO in India and grabbed much attention from investors and traders alike.

The final offer price of the company stood at Rs. 76, and it opened on its first trading day at Rs. 116. The stock closed at Rs. 125.30, which marked gains of 64.8% from its final offer price.

The company managed to raise Rs. 9.375 crores from its IPO.

 

PayTM

PayTM is another internet company that we have on the list. The company started out as a digital payment service, and it has branched out into e-commerce, financial services as well. The company garnered a lot of interest and IPO analysis during its book building.

However, despite a lot of optimism surrounding the company, the stock plummeted by 27% on its listing day, making a tepid debut. PayTM failed to perform as per expectations post-IPO and has delivered returns of -26.4% since then.
Despite the negative returns, analysts are starting to be bullish on the company again, seeing the strong growth in the number of users of the company’s services.

 

Paras Defence

Paras Defence and Space Technologies is a Mumbai-based company that specializes in engineering and testing products for the Indian defence sector. The company has been in operation since 2009.

Paras Defence performed admirably on the first day of trading itself. The company had an issue price of Rs. 175, but opened at a whopping Rs. 475. The stock hit the upper circuit of 5% on the first trading day providing stellar IPO returns.

Since its IPO, Paras Defence has delivered returns of 47.8% till date. The company’s IPO was oversubscribed by 304.26 times, which makes it the largest oversubscription since 2007.

 

Laxmi Organic

Laxmi Organic is a chemical manufacturing company that has been in operation since 1989. The company is the largest manufacturer of ethyl acetate in the world.

Laxmi Organic also makes it to the list of companies that gave a glitzy recent IPO performance. It had an issue price of Rs. 130 and started trading with a premium of 20.15%. The company has gone from strength to strength since then and has delivered returns of 156.9%. The massive success of this stock can be attributed to high sales and stellar quarterly results.

 

Wrap Up

Not every company managed to perform well in 2021, but there were many that did. Many of the IPOs in the year managed to exceed expectations, while some failed to impress.

We hope that you found our IPO performance analysis insightful and got lucky in stocks that made bumper listings, even as a trader!

And while we’re discussing IPOs, did you know – you don’t have to stay glued to your screen to monitor markets on listing day and so on!

PHI 1 allows you to automate trades by entering the desired criteria, which will execute trades when your criteria meets the right opportunities.

Get charts, screening, backtesting, simulations, execution and a lot more.

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Enjoyed this article? Watch this space for more in our 2021 Market Round-up series!