Taking Stock: Sensex, Nifty end lower after record-breaking spree; bank, metal stocks weigh heavy

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After hitting fresh record highs in the first half of the August 18 session, the benchmark indices saw profit booking in the later part of the day amid selling in banking and metal stocks.

At close, the Sensex was down 162.78 points, or 0.29 percent, at 55,629.49, and the Nifty was down 45.80 points, or 0.28 percent, at 16,568.80. The market will remain shut on August 19 on account of Muharram.

In the opening hour, the Sensex and the Nifty touched record highs levels of 56,118.57 and 16,701.85.

“The index opened the day with a strong gap but profit booking from higher-end led index closed in negative territory at 16,569 with loss of nearly half percent and formed a bearish candle after forming bullish candles for four consecutive sessions,” said Rohit Singre, Senior Technical Analyst at LKP Securities.

The Nifty formed a dark cloud cover pattern on the daily chart, which is a bearish reversal candle formation, he said. The index still has good support at 16,500, if broken, more profit booking is likely and the index may slip to 16,400. Resistance now comes near 16,630-16,700 zone, Singre added.

Hindalco Industries, Kotak Mahindra Bank, ICICI Bank, Tata Motors and SBI Life Insurance were the top Nifty gainers. Eicher Motors, UltraTech Cement, Bajaj Finance, Adani Ports and Bajaj Finserv were among the top losers.

On the broader indices front, the BSE midcap index rose 0.26 percent and smallcap was down 0.18 percent.

Among sectors, the Nifty metal and bank indices fell 0.8 percent each, while buying was seen in FMCG, pharma and PSU bank names.

Stocks & sectors

On the BSE, the metal and Bankex fell a percent each, while the realty index dropped 0.67 percent.

Among individual stocks, a volume spike of more than 1,000 percent was seen in Indiabulls Housing Finance, RBL Bank and United Spirits.

A long buildup was seen in The Ramco Cements, United Spirits and UBL, while a short buildup was seen in NMDC, ICICI Bank and IndusInd Bank.

More than 200 stocks, including TCS, Wipro and Titan Company, hit a 52-week high on the BSE.

Technical View

The Nifty formed a bearish belt hold candle on the daily scale.

“It has to continue to hold above 16,500 zones to extend the momentum towards 16,700-16,750 zones, while on the downside, support shifts higher to 16,400 and 16,300 levels,” said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.

Outlook for August 20

Ashis Biswas, Head, Technical Research, CapitalVia Global Research

The market saw some correction from higher levels of 16,700. For the short-term, it is crucial that the Nifty sustains above 16,500.

Early signs of reversal in the market with deviation occurring in Nifty 50, Nifty midcap, and Nifty smallcap. Traders should refrain from building a new buying position until further improvement in the market breadth.

Rahul Sharma, Co-Founder, Equity99

For August 20, the Nifty will have immediate support at 16,500 followed by 16,450-16,375. On the upside, 16,700 will act as resistance.

The Nifty Bank, which underperformed the Nifty, lost more than 400 points to closed at 35,554.50. It has immediate support at 35,300 and if it slips, then 35,000-34,850 will be the next support.

On the upside, 35,800 will be the hurdle above which 36,000-36,200 will act as a resistance level.

Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments

The index faced some selling pressure and gave up its gains. However, the trend continues to remain positive and traders should use corrections to accumulate long positions.

The Nifty has good support at 16,400 and the momentum will continue to be strong and bullish until the index closes below this level.

The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Make the right grain merchandising decisions this fall

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One of the classes I enjoy teaching for the Kluis Grain Trading Academy is “The Basics of Grain Merchandising.”

Students in this class often have an aha! moment.

Making the right grain merchandising decisions involves knowing how to get your crop sold and understanding local basis patterns.

For most farmers, it is also about grain storage and when they need to get money out of the crops to make payments. It is complex.

Merchandising is a very regional decision making process. It is different for every farm. However, making the right merchandising decision can increase your average selling price by 20¢ to 30¢ per bushel.

Over the years in our academy, it’s been rewarding to see students understand and apply what they have learned about grain merchandising.

Here are some basics you need to put together when you begin building your grain merchandising game plan. Each year you work at this, it gets easier.

First, look at the 2021 crop, and track inventory value and week-to-week farm profitability. Here are the basic questions you start with:

How many acres of corn, soybeans, and wheat did you plant in 2021?

What is your yield estimate for each crop?

What is the total production you expect?

This simple exercise is one that most farmers are doing right now.

I encourage you to do this exercise each week and to take it one step further: Write down the total value of your crop. Just multiply your latest production estimate (in bushels) by that day’s grain prices (per bushel). In the incredibly volatile grain markets this spring and summer, farmers lived through huge ups and downs at the Chicago Board of Trade.

By doing this week-by-week exercise (and thinking in dollars, not just bushels) you easily can see the impact of higher and lower prices on your farm. Once you have the cash value of your crop written down, make some phone calls or go to elevator or processor websites. Determine what the bids are for right off the combine and also the December bid. What is the bid into March, May, and July 2022? You will see that corn you can deliver in September is worth more than the bid six months later.

As a general rule, most years it does not pay to store soybeans very long. On the other hand, storing corn from the October harvest lows until the next spring usually has given you a really good return. This again is a regional decision. The right grain merchandising move in Tennessee is a lot different from what you would do in Iowa.

When studying futures prices, you should not look just at whether the market is up or down. Learn to watch the spread from one contract month to the next. As I write these words, the spread between December 2021 and March 2022 corn is just 8¢, the spread (carry) to May is 10¢, and if you hold all the way until July, the December-to-July spread is just 12¢. When I factor in my expected basis improvement and the cost of borrowed money, the market is telling us that moving cash corn between December 2021 and March 2022 is the right merchandising alternative.

This is a snapshot of what I am looking at right now, and this likely will change by harvest. That is why it is important to look weekly at your changes in basis and your futures alignment.

For soybeans, the market is offering a big premium for September delivery. For farmers in the southern Corn Belt and Delta, selling at harvest is likely to be the best merchandising decision. Why hold cash soybeans until January 2022 when the January bid is 50¢ less than the September off-the-combine bid?

Most central and northern Corn Belt farmers will not harvest soybeans until October or November. I expect the normal seasonal basis improvement by December. After that, the market is not giving any reason to hold soybeans in the bin. At the time I am writing this article, March 2022 soybeans are trading at a 16¢ discount to the January 2022 contract. The May and July 2022 contracts are trading at a 23¢ discount to the January futures.

If you are bullish on soybeans and want to take advantage of a rally in the futures market, then holding long futures, calls, or call spread is less risk than holding cash soybeans. If you are not comfortable doing this, then find someone on your farm team who is willing to learn how.

Education is cheap.

Making the wrong merchandising decision is expensive.

Final thoughts: I am a long-term bull on the grain markets. I think that the major lows put in during the COVID-19 crisis in 2020 are major long-term cyclical lows. I am also a realist. I think the grain markets will put in a seasonal high in spring or early summer 2022 and be lower — possibly a lot lower — by the 2022 harvest. Making the right grain merchandising decisions is one part of a successful risk management plan. There are two other key components: setting price targets (where you set the futures price at which you will sell) and being an incremental scale-up seasonal seller.

Farmers who made cash and new-crop pricing decisions in May and June 2021 were well-rewarded. I think the same will be true in 2022. I enjoy seeing farmers learn key marketing concepts and gain control of their farm profits at Kluis Grain Trading Academy. As one student wrote on her year-end class evaluation, “I really enjoyed this class; it taught me to look at my grain like it is money.” That is an aha! moment that will last a lifetime.

Bullish Belt Hold Definition

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What Is a Bullish Belt Hold?

A bullish belt hold is a single-day Japanese candlestick pattern that suggests a possible reversal of the prevailing downtrend.

The pattern forms when, following a stretch of bearish trades, a bullish or white candlestick occurs. The opening price, which becomes the low for the day, is lower than the close of the previous day. The stock price then rises throughout the day, resulting in a long white candlestick with a short upper shadow and no lower shadow.

It can be contrasted with a bearish belt hold.

Key Takeaways A bullish belt hold is a pattern that can signal a reversal in investor sentiment from bearish to bullish.

Bullish belt holds are easy to spot, but the signals must be confirmed. Its reliability is enhanced if it forms near a support level.

The bullish belt hold can be found across all time frames but is most useful in daily and weekly charts.

Understanding a Bullish Belt Hold

The candle, similar in appearance to a white Marubozu, opens at the low of the period and subsequently rallies to close near its high, leaving a small shadow at the top of the candle. The pattern surfaces after a stretch of bearish candlesticks in a downtrend. The candle’s opening price is significantly lower than the previous day’s low. The pattern closes well into the body of the previous candle, holding price from falling further, hence the name “belt hold.”

Image by Julie Bang © Investopedia 2019

The bullish belt hold, known as yorikiri in Japanese, often signals a shift in investor sentiment from bearish to bullish. This candlestick pattern occurs frequently and shows mixed results in predicting a security’s future price. The potency of the candlestick is enhanced if it forms near a support level, such as a trend line, a moving average, or at market pivot points.

As with any other candlestick charting pattern, traders should consider more than just two days of trading when making predictions about trends. The bullish belt hold can be found across all time-frames but is more reliable on the daily and weekly charts as more traders are involved in its formation.

Trading the Bullish Belt Hold

Like most Japanese candlestick patterns, traders should not trade the bullish belt hold in isolation. Using other technical indicators and price patterns greatly increases the probability of a valid signal.

For example, the bullish belt hold may open below a previous swing low and close back above that point to form a potential double bottom. The bullish belt hold should be a long white (or green) candlestick to indicate that the bulls have taken back control. Ideally, the candle preceding the pattern should be accompanied by above-average volume to indicate climatic selling and a possible reversal to the upside.

The bullish belt hold is not considered very reliable as it is often incorrect in predicting future share prices.

On occasions, the bullish belt hold can be a mere pause in the overall downtrend, therefore, it is prudent that traders wait for the price to confirm the pattern. An entry should only be taken when the price trades above the high of the belt hold candlestick.

Conservative traders may want to wait for a close above the high of the pattern. If the bullish belt hold candlestick is long, traders could place a stop-loss order at its midpoint. Alternatively, traders could set a stop below the pattern. Although this requires a wider stop, there is less chance of market noise interfering with the trade.