Replacing the Index

Well of course there are reasons and rules for a stock components to make in and out of the Nifty.  But is the approach always objective? Asian Paints and Bank of Baroda replaced Reliance Power and Reliance communications in the Nifty. Lets’ review the changes according to Jiseki. Mostly like in life it’s the worst performer that gets kicked out. The Reliance stocks are the worst performers and hence got kicked out. However, both the stocks have positive Jiseki cycles and have indeed done better compared to the stocks that replace them (YTD).

So is there a pattern here? Yes, generally the stocks that get selected are the ones that are doing the best i.e. Asian Paints and BOB. Best not in terms of relative performance or YTD returns but best in terms of top or bottom of a group. Both the selected stocks have topping Jiseki cycles (top performers) and have negative Jiseki sell signals.  The latest ALPHA carries absolute and relative signals, technical cases and divergence plots to explain the running after winners approach of stock selection by the Nifty Index committee. And why it’s a subjective and inefficient idea.

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Our Jiseki Time cycles are seasonal patterns of strength or weakness in assets. They are derived from percentile rankings from 1 to 100. The higher the percentile more the chance for an asset to weaken and worst the ranking, better the chance for the respective asset to outperform. 100 is top relative performance and 1 is worst performance. The idea is that performance is cyclical. A top performer will underperform in future and vice versa. A top relative performer is also the worst value pick and the top relative underperformer is the best value pick. Jiseki is another name for Performance cycles, time triads and time fractals. The signals are illustrated as a running portfolio and as Jiseki Indices. These signals can be used by fund managers for relative allocations, traders for leverage bets and high net worth clients for selective trades.

Jiseki Interpretation. Signals are interpreted as crossovers between various Jiseki Cycles. All three Jiseki cycles (Jiseki 1,2 and 3) depict different time frames. Example: An asset is ranked above 80 percentile and all the three Jiseki cycles are pointing lower, this suggests a running SHORT SIGNAL. Our Jiseki Indices use different kind of exits based on price and Jiseki Cycles. We have color coded the (Jiseki 1>Jiseki 2) SHORT zones with brown sandy (burlywood) and grey (Jiseki 1>Jiseki2) for LONG SIGNALS.

Coverage India: CNX100 traded stocks and Indian Indices.

Michesan Anna-Maria, discovered her interest of markets immediately after completing her graduate studies in Economics. She followed it up with post graduate studies in corporate finance. A host of research work in behavioral finance, option strategies and quantifying market sentiment followed. Anna covers Indian equity and combines Elliott, Time Fractals and Time Analytics to deliver accuracy across time frames.


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