hello sir,
I have tried elliot wave analysis it looks like its in minor wave 3 of wave 5.
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Bajaj Finserv - weekly chart.
Stock formed a good VCP pattern for last 3 years. It has had a good break out recently along with making a 52 week high. Volumes have been strong.
Underlying business is still growing at > 25%. P/B compressed from 8 to 4 in period of last 3 years. Time correction seems to be over and the next move might resume from here.
Disc: trading position.
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My recent learnings in identifying structural stories.
Stocks that have a structural story seem to move in parallel channels on weekly and/or daily charts ever since they turnaround or breakout from a base.
Attaching a few charts here that have moved in parallel channels in the past; currently still in parallel channels ( the likes of Polycab, Godawari power, Ncc, Precot, Time Technoplast, Stride Pharma, Shaily, Kilburn Engineering and 20 microns)
In this chart you can see even during the IT raid news the stock didnt breach the lower channel, rather reversed from it. Technical analysis can help us overcome such grey “” situations in investing where we do not know the impact of the development. The stock has been in the channel ever since it broke out from the base at 1162.
Stock again has been in a channel since double bottom breakout at 300. Current overhang of falling iron ore prices, government retrospective royalties and subdued demand from china have compelled the stock to retest the lower channel. A lot of times clarity comes in news after the stock has plummeted 15-20%, so we can use such technicals to exit a stock totally or partially or even enter as the stoploss would be very small if we have conviction in the business. Its a make or break level for the stock as its a previous gap up area as well.
This has been a huge winner; almost 10x; and still in the channel. Promoters target 500cr revenue in FY25 and have issued warrants recently but valuations are quite stretched.
It has run up more than 3x and the valuations are still cheap in this market with the company growing at 18-20%.
Order book is still growing after such a good runup.
and some that have started to move that can potentially be good winners (the likes of Wockhardt, Patanjali (on daily charts) and Oriental aromatics ltd).
This one seems to have turned around with very good q1FY25 results. Management is guiding for good follow on quarters. Concalls are interesting.
Patanjali is in a very early stage and yet to be determined wether it stays in the channel. Broke out from a double bottom base and Vcp on weekly charts as well ever since it topped out in June 2020.
Again moving in a channel since breakout at 240-250 levels. It has recently formed a smaller channel on daily charts as well.
Trying to find patterns to identify structural stories early by charts.
These patterns could last much longer even after a few names already up 2-3x. The idea is to identify low risk entry near the lower channel in stocks where we couldn’t enter earlier and still find enough future runway OR exit at the upper channel if we want to book some profit/exit entirely which again is an individual call according to one’s understanding of the business.
A break of the channel on either side; on upper side of channel could give a frothy move while on the lower side of channel could be a potential breakdown, should be monitored.
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Stock name: Tilaknagar industries
Sector: Alcohol and beverages
Thesis:
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Andhra Pradesh and Tamilnadu expected to reduce excise duty and create more conducive policy for alcohol sector. This could boost volumes by 20+%.
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More focus on premiumization, resulting in increased margin
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Company has reduced debt drastically and will be debt free by Q2FY25. All profits will become cash flow and help company expand distribution network, marketing reach with the cash in hand.
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Technically about to break ATH with long 18 month consolidation.
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You have taken lot of efforts in presenting the channel theory fitting to structural stories. But I feel all the stocks which are going up in last 2-3 years , can be put in such channel…May be I am wrong…but i feel this is fitting the channel after the story has played out…
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Thats a nice observation. First thought as I look at the charts and the parellel lines is, if a stock has been in a constant upward trajectory, you can always draw two parallel lines. Unless, there is some indication on how long that channel will last (which I think as investors, everyone wants to know), these charts are unactionable as almost all rising stocks will have this pattern.
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These channels can be used to book partial profits or exit once it’s broken on the upside and gives a frothy move OR exit or reduce position in a stock.
Few companies will form a channel in the initial part of the rally also so it can be easier to scale up the position.
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HCC cmp 48. Monthly chart shows stock price crossing strong resistance band of 48-49 in 2024, first time after 2011. Stock price went up to hit a swing high of 57 before it started correcting and has been retesting the zone of previous resistance.
Structure from 2017 on the monthly chart shows a nice rounding structure and a breakout and now a retest. Right side of the rounding structure shows good volumes build up.
The challenge in these kind of set ups is that the retest and consolidation can last a few weeks to a few months and one needs to position accordingly.
Fundamentally company has been actively reducing debt. Swedish subsidiary Steiner has divested the construction division and now has only real estate division. Quarterly results still do not show consistency in terms of profitability, though there has been improvement as compared to earlier, but its still early days.
disc: invested as a techno funda bet. (not a recommendation. Please do your own diligence if contemplating investment. )
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Weekly
daily
Gujarat Fluorochemicals has broken out of a triangle consolidation (orange lines in the weekly chart and blue lines in the daily chart) over the last one year approx.
The management has guided for better revenue Q3 onwards of this year.
The LFP plant under the battery segment is going to be commissioned this quarter. The fluoropolymers vertical will start seeing numbers from the second half of this year.
disc: Not invested yet.
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I keep watching for order inflows, but though they said they were L1 for a number of large orders, there have been no order wins announcements for two quarters. It seems a bit strange.
Hi Hitesh sir,
Request your view on below items and how how should an investor look at these items:
1.
There is mention of expcetional item of 350 crores which was adjusted against general reserve. I am unable to find furhter details of this in the annual report (I am sorry if I have missed looking at anything here…learning to read the balance sheet). This item was highlighted by the auditor in the audir report.
This issue was covered on twitter @ x.com.
- Below is the rating update details from Care:
The hounarable court has allowed the states to impose or renew taxes retrospectively. This means states can levy taxes on transactions related to mineral rights and lands that took place as far back as April 1, 2005.
Below is the tax paid by Prakash Ind in the past:
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