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POSTED BY ON September 18, 2012 2:29 pm COMMENTS (16)
Dear Jagoinvestors,
Using Nifty RSI (Relative strength index), we can get highest returns ( >20% CAGR ) from Mutual Funds If you have little bit knowledge in stock markets.
When Nifty RSI touched 30-35, you can buy more units.
When Nifty RSI cross 70, you can sell units if you want to exit from Mutual Funds. It works out for long term (More than 5 Yrs) investors only.
disclaimer: Today Nifty RSI Touched 74.
Thanks,
Sekhar
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Dear Shekhar,
Just after 2 Days RSI came down to 50.
What you will do with this figure? I meant within two days you will shift call from Sell to buy?
I always open to learn new things.
thanks
Jig
Dear Sekhar, I already said there is nothing wrong in being so much technical but don’t you feel somehow this discussion is not meant for a layman investor?
I’m not doubting your abilities but posting the question keeping in mind the target public of this forum.
Thanks
Ashal
Hi,
Never ever compare India with Japan.
Japan trying to weaken their currency yen while India trying to strengthen Rupee. Because Japan depends on exports.
Interesting news is Japan Launched Campaign to Weaken Yen in 2011 to boost exports.
You have never mentioned that currency has got anything to do with capital markets. You just said that if the major companies are quoting at 50% discount, buy blindly, since it is implicitly stated that all countries will only rise and never have a downfall.
Precisely for that reason, it is better to have an international diversification. But that is a different point of view.
Do i need to mention that currency would do something to the capital markets? Fluctuations in Currency can make disaster to the whole economy, particularly Importing India.
If SBI quoting at 50% discount means high inflation, High interests and High NPA’s. Sbi is tree for all banks. If the tree is in problem, then that may spread to other banks and the whole system will be in trouble.
If L&T is in problem, means entire infrastructure sector is in crisis. If TCS is in problems means the whole world is in crisis.
Thanks,
Sekhar
click on 3m, 6m, 1y, 2y, 5y, max on Nifty Chart to analyze the Nifty RSI.
Hi,
Actually you don’t understand me or i don’t communicate with u in a proper manner. whether you MF have exposure to nifty shares or not, Here that doesn’t matter.
what i mean is when Nifty RSI crossed 70, you can exit from MF if you want.
2) ETF’s means like Nifty Bees?
5) Go through below link, then u will find nifty chart in that page. in the chart, there is drop down button “Indicator”. Under Indicator, you will find out Relative Strength Index. click on it.
Under Nifty chart, you will see a small chart having RSI data. RSI often fluctuate between 30 & 70.
http://www.moneycontrol.com/nifty/nse/nifty-live
From Below link, you can understand whether markets are in Overbought or Oversold range.
http://stockcharts.com/help/doku.php?id=chart_school:technical_indicators:relative_strength_in
Thanks,
Sekhar
If you want to analyse apples, and then execute oranges, it is your choice. After all, it is your money and your responsibility.
Nifty BEES is a type of etf. yes.
Regarding your RSI data, let us check the past data according to your initial statement:
In Aug 2002, the RSI got below 30 (29.33), so you buy the units (Nifty level 950). In Dec 2002, the RSI got above 70 (Nifty level 1000), so you sell. Then when do you buy next. By RSI, the next buy signal comes only in Aug 2008 (6 years later), when the Nifty has gone to over 6100 and come back to 3600. To me, this strategy seems like a big fail even on past data, leave aside the execution.
Ramesh
Hi,
I mentioned the best buying would be when RSI in between 30-35. Check it out in above this page.
Hi,
1) I don’t have answer for this question. Because it’s related to Nifty weightage on Sensex.
But there is correlation between Nifty RSI and MF. If nifty RSI crossed 70, that means stocks are in uptrend (As per Advanced & Decline ratio). see current market, Nifty RSI now 75 and markets are at 1 year high. If markets fall down from here, then it will direct impact on MF bcoz nifty shares are the major portfolio of all MF. Not only Stocks, Commodities also having RSI.
2) Sorry, I don’t have good knowledge on ETF.
3) I heard that some times DSP block rock following this way.
4) It’s an interesting question. Anyone can do this. But be careful when you pick stocks. Select the best stocks in every sectors like SBI, TCS …etc.
Even warren Buffet also doing this now and he have new investment strategies recently. Open below link & watch the video how he gain 6o M $ (25% Gain) within a year.
http://www.bloomberg.com/news/2012-09-14/berkshire-posts-25-intel-gain-by-shunning-buy-and-hold.html
5) In the last 5 years, only 7 times nifty RSI crossed 70.
Just observe the top rated MF charts, they are now near to all time high since inception.
If you want to exit from MF, but looking for best time; then this is the right time.
If you observe UTI Opportunities Fund (G) fund, now It is quoting at all time high.
Best strategy to exit:
Stay in MF for atleast 2 cycles or whenever nifty PE ratio touch 24, Then exit.
Best strategy to enter :
when some stocks which decides the country growth like SBI, L&T, TCS, Maruti Suzuki … etc available at 50% discount, then enter blindly. Close your eyes, don’t look at paper or TV. Because India means these stocks. If these companies are in trouble, then they will drag their entire industry into trouble. There is no risk involved in investing. We can guarantee our money if we are well planned.
Thanks,
Sekhar
1. Correlation will happen only for stocks with Nifty/Sensex stocks, so only large cap funds will correlate. Not others, eg IDFC Premier equity will not. If you analysing data for apples, do not apply it to oranges, is what I want to convey.
2. There are many ETFs which track nifty/sensex directly. Also, you can sell/buy them any time of the day, unlike normal MFs. Plus, quite less FMC too.
3. Yes.
4. Warren Buffett’s philosophy is quite wide, with loads of patience and acumen. So, let him be. His apparently changing styles will not help us.
5. Post the times or the links for that statistic and we can check it out in detail.
Check out your best strategy in terms of Japanese market (just an example). Because by the 50% discount method, the Nikkei posted a high of 38915 in 1989, and fell to 19000 levels in 1992. Follow it afterwards yourself. Don’t tell me, this cannot happen with India. May or maynot is always there.
Ramesh
1. How is Nifty RSI correlated with mutual fund? You mean any MF or those MF which have Nifty as their benchmark?
2. or do you mean ETFs?
3. You also seem to suggest that fund managers do not check these things out.
4. Why not do it with a large liquid stock only, and not an MF?
5. How come this is important for people with long term horizons (>5 years)?
I am confused. Can you give some clarifications in these aspects? Thanks.
I am always for good ways of increasing my money, or decreasing the risk.
Hi Ashal,
In the Stock Market history, 3 times only RSI crossed 80.
When there is huge optimism across market, that would be good time to exit if you want to come out from Mutual Funds.
Thanks,
Sekhar
Dear Sekhar, there is nothing wrong in being technology driven (following RSI in this case) but greed is the most dangerous enemy in the path of wealth creation. As you said, Huge optimism should decide the sell call but my dear friend, this huge optimism alone ‘ll blind the call most of the times.
Thanks
Ashal
Dear Sekhar, what ‘ll you do or say if instead of coming down this RSI goes evwen higher to 80-90 or 100 level in coming months?
What about the tax liability on the redeemed MFs?
Thanks
Ashal
‘Guaranteed’ is the funniest word in finance.
SO I am assuming you have sold MF today since RSI > 70. Lets come back to see how this fares versus the actual return in the markey