I don’t track ISMT.
@ishu I do not have any views on dividend instruments. I rarely invest in debt instruments.
@Abhishek_Kumar_9 Charts of all the hospital cos like hcg, nh etc seem stable and these stocks seem to be consolidating. Astec Life is in a strong uptrend. Fundamentally I don’t track any of them.
Hello @hitesh2710. Appreciate of you could share your views on CDSL. I am trying to understand if CDSL should be seem as a cyclical play that does extremely well during the bull market. And is vulnerable to significant revneue constriction during bear markets when trading decreases and there are fewer IPOs.
Or it should be seen as a long term play on growing equity investment trends. With decreasing bank deposit interst rates and just a fraction of Indian population having an active demat acount, there is really lot of growth still left. An antithesis would be to look at percentage of Indians who areTAX payers. Can the demat account holder number be at much variation to number of tax payers?
I dont understand technicals but would be good to know from you if the charts are giving any indication of how the future might unfold for CDSL.
In advance, thanks alot for your response and gratitude for so much wisdom you regularly share here.
Hello Hiteshji,
Thanks for sharing all the knowledge for benefit of all investors. I have couple of queries for which I wanted to get your views.
Thanks in advance.
Regards, Nikhil
I do not track CDSL fundamentally. But on charts it does not look good. It looks like a stock that has had its day in the sun. There is a sort of rounding top formation after a sharp frothy rally. In my experience , these kinds of set ups are better avoided.
Its like trying to have an affair with an ex when you are happily settled in life. A situation fraught with risks.
There will be the odd such situations which could provide winners, but base rate of success is low.
In techno funda investing, there is no fixed order about what comes first. Usually if you are good at running screens, then technicals come first and then from the list of technical picks, fundamental digging is done. I follow various technical models which provide me with few list of stocks and I tend to work on them by looking at fundamentals. If all things align and all boxes are ticked, I like to take positions. But sometimes I have observed that in technical set ups, where I cannot find any reason for stock to go up, stocks actually have gone up a lot . To share an experience, at the time when I used to hold and load Laurus, Neuland was just about setting up for a good rally. I tried to look at its fundamentals and could not be convinced about the same. It broke out of a nice inverted head and shoulders pattern in July 2020 at around 550, but I was so caught up with the Laurus story and could not figure out what positives could come out of Neuland that I did not pay any attention to it. And stock price went right up from around 550 to 2800, nearly a five bagger. But then I would never have had the kind of conviction in Neuland which I had in Laurus. So allocation would have mattered and ultimately portfolio returns.
When technical set ups do not pan out, and stock price tends to break important technical supports/levels, its prudent to exit. But sometimes for a big allocation in a very small cap co with low volumes, its difficult to exit. In such situations, there is no alternative to wait and bear the pain. Since you would have done your fundamental research in the first place (a must in any big position) , there would have been no problem with conviction. I faced such a problem in case of my Vimta holding. Now in hindsight, I could easily see that I could have put a . trailing stop loss of 10-15% below swing highs and possibly exited. But in real time, I did not exit and had to bear some amount of notional pain. However I kept holding on and since the results and commentary have been positive, it makes sense to keep holding on, more so in the view of recent strength seen in the stock.
Blue dart has been on a strong roll having just cleared its previous all time high of around 7800-7900 and continuing to show strength. Nocil has formed a nice rounding bottom pattern on the chart and as of now looks quite good. Fundamentally also it seems to be doing well, though of late I have not followed it.
I don’t know of any website for GMMA charts. In fact I am not too comfortable using most of the online chart services, being more comfortable with my own stuff.
Dear Hitesh ji,
Wondering if you track either of GPPL or SCHAND? Would love to hear your thoughts on it.
GPPL: It looks like Gujarat Maritime Board is inclined to extend the lease. My thesis is: if the approval comes through then GPPL will see a significant upside.
SCHAND: it’s finally in black after 3 years. Management commentary was very positive in the last concall (barring the skyrocketing paper prices). Do you think it will turn around?
Regards 
Disc.: not invested in either
Hitesh sir,
Curious to know why you feel that the juice from Praj is over? Is your thesis based on the fact that the next 2-3 years growth in the stock is already factored in its current price?
Current ethanol blending is around 8% which the govt wants to take to 20% in the next 3 years.
Will it not give large orders to Praj for setting up new plants and the regular Annual Maintenance Contracts associated with new and existing plants? Also diesel blending is not yet started and processing plants beyond sugar from other products.
Since you seem to be bullish on Praj. Do you firmly believe current cash flows are structural and not simply just at a peak bull point in cyclical industry. Praj has been depicted as a very “Scientific” business. Doing waste water mgmt projects, biodiesel and bio-whatnot, a sugar sector facilitator to other sugar companies, Praj Matrix! etc. And now we have blending targets too without considering the huge impact it will have on automobile engines.
Just curious if you are sure that Praj and not sugar companies are just not another cyclical business.
From historical numbers, we might be on edge of reversal of numbers but hey what do I know.
Please do share your views.Thanks.
Dear Hitesh sir
Firstly thanks for spending so much of your time to educate novices like me through this thread.
My question is regarding Hbl power. I read you are holding this stock. Is your conviction purely on technical basis or are you convinced fundamentally as well with it and if so what gives you conviction?
My second is on Gujrat fluorochemicals. At what level do you think stock would reach its intrinsic value given all things remain same and what will be a price to cash out?
Thanks sir
Dear Hitesh ji
In case you are tracking, may I know your opinion about the efforts put in by the management of Raymond Ltd in improving the company image, making it investor friendly and trying to improve / unlock shareholder value, bringing in outside professionals to manage various parts of their business (as per their own commentary)?
The company’s financials seem to be doing quite well, they are clear track for debt reduction (with a planned IPO and from improved financials). They have quite a diversified business ranging from textile to engineering to real estate. I am not sure how to value the company but the stock seems undervalued (at around 6000 crores now) just be comparing it with their land bank value itself. All their business verticals are profitable and have decent margins (as per the respective sector).
Do you feel the efforts being put in by management is serious enough and will it result it re-(e)valuation of the company by investors and market?
Praj had rallied from Covid levels of 60-70 Rs to high of 400 plus in June 21. This was based on the ethanol story picking steam. Actual results started flowing in over next 3 quarters, and all the while stock price did not cross 400 by a big distance. This tells us that most of the positives expected in next few quarters were priced in at around 400 range. Even now it is in same range. In Peter Lynch parlance, the price is catching up with earnings. I guess next big move will come about once markets are assured of growth continuing. So till that time, it could remain range bound. How it performs going ahead I do not have much clue. But at current TTM PE of 46, it will need to show good quarterly numbers to meet market expectations.
This ethanol blending target of 20% is govt’s aspiration target and I usually take these govt utterances with a pinch of salt.
There might/might not be too much downside from current levels, but as of now I find may better more attractive options to deploy my money, so Praj does not figure on top of my buy list or watchlist.
@newone I do not track raymond.
@Apurva_Dubey I do not track GPPL or S chand.
HBL Power thread on VP has very good details of fundamental triggers for the company. I do not have more to add to those details. I had put up a technical picture which seemed to indicate good times for the company based on charts. In such instances where both the technical and fundamental picture are in sync, it makes it easy to have good conviction.
Guj fluoro seems to be on a strong wicket as of now. I do not know how to calculate intrinsic value of this kind of company. In fact I am not a big fan of intrinsic value concept. Stock price has just about crossed its strong resistance zone of 3000-3100, so we need to see how it goes. I do not have any fixed exit targets for it in my mind as of now.
Hitesh Bhai, thanks for all the posts that’s are helpful to everyone. I have a question.
Some stocks which are fundamentally strong and in momentum having given 2-3 solid quarters, the market builds in lot of expectation in it. After a few blockbluster quarter, the company may not be able to come out with similar results, sometimes on account of larger base.
Most of the times, these companies come out with good results but may not be enough for the market. There have been instances of stock tanking by even 10% on good results but not enough to please the market. When do you get down of such train? you wait for the result to come up and allow things to unfold or exit without thinking much.
Its difficult to generalise the stock price movements based on results. Each company has to be taken individually and seen and evaluated.
There are times in the market when even very good quarterly results are met with selling pressure. This is often because of pre results run up, where some people who have more information of expected results have already built up positions in the run up to results, and start off loading on good results. But this is often a short term event. Ultimately if results are good and management commentary (wherever concalls are done) is encouraging, stock price does make comebacks.
For longer term holdings, these 10-20% corrections should not matter as long as the company keeps reporting good growth numbers.
You will see a lot of these 10-20% corrections in the recent example of Laurus during past few quarterly results and the kind of reaction market gave to the stock price.
Usually whenever there has been sharp run up prior to results, one has to be wary of market reaction to even expected good results. Atleast in the short term.
@hitesh2710 bhai, a question on spotting a confirmed reversal.
Below is the chart of Valiant Organics on the daily timeframe. It has been on a downtrend for many months and had fallen more than 70% from peak to trough. Over the past few days it has reversed sharply with high volumes. No major announcements or fundamental triggers have come through in the past month or so, except for them incorporating another subsidiary which I don’t think is material enough to warrant such a sharp upswing. The red, green and blue lines are the 20, 50 and 200 DMA.
Fundamentally at the recent lows, it was trading at just above one time sales which intuitively seems very low for a mid-margin specialty chemical company and with the pedigree of the Aarti group. I am bullish long term at present valuations and am looking to build a position.
My question is, how does one gauge whether this is a sustainable reversal or a dead cat bounce? How do you view the risk reward of building a position here versus waiting for some more confirmation. Could you also extend this thought process to other reversals - when does one know that a reversal is for real.
And please do share your fundamental view on Valiant as well, in case you track it.
Disclosure: Have a small 1% of PF position from 580 levels. Looking to build it up to 3-4% of PF.
Edit: Similar charts observed in Sequent Scientific and Jubilant Ingrevia as well. Less bullish on these fundamentally but putting these down out of academic interest for your thoughts.
Any stock after a sustained fall is going to provide with a counter trend rally. Usually its a tricky question to answer whether the counter trend rally is the real deal or just a counter trend rally.
However there are certain parameters to look at to try and get a better idea about the above question.
First is to look at the chart on a longer term time frame. Preferably a weekly time frame chart. And try to find out a swing high and a swing low. Usually it should be possible to map out a swing on weekly chart which shows a smooth uninterrupted move on weekly time frame, often channeled or triangular or even without these boundaries.
Now for a medium term trend reversal, we want to look at a falling trendline breakout (on above weekly chart) preferably with volumes higher than normal. Next clue could be a higher top and a higher bottom formation. To illustrate swing highs and swing lows, in case of Valiant organics, I have drawn trendlines joining tops and bottoms which gives rise to a sort of triangular structure. In this chart, whenever the price tries to hit the upper trendline and falls from there, it makes a swing top. Similarly on the lower trendline, wherever the price hits it and bounces, its a swing bottom.
So after breakout from trendline, we should be on the lookout for a higher top and higher bottom. And check out for possible resistances at key Fibonacci retracement levels. Plus zones of support on way down, or zones of consolidation on way down will act as resistance on way up. (change of polarity principle)
Yet another concept is faster retracement of the last falling swing move. If the current upmove takes out the swing high in lesser time (than it took to fall to swing bottom) then it adds to bullishness of the move.
On chart of Valiant I have put up, note the dark red lined zone which can act as resistance on way up. Reasons for this are: 1. It was a consolidation zone on way down. 2. Falling 200 dema and 200 sma are currently within that zone. 3. 38.2% retracement to the entire swing fall falls within that zone.
You can also put up retracement levels to each individual swing move and can arrive at a potential resistance/resistance zone.
Note that the 200 dema and 200 sma are falling fast. Once stock price goes above that, wait for these moving averages to flatten and then turn up and the stock price has to be above those levels. The other concept of 30 week moving average of Stan Weinstein is almost similar, but has to be looked at on weekly charts. There too we want price to cross 30 WMA, then 30 WMA to flatten and ultimately turn up. That usually signifies a sustainable change in trend.
Overall if a stock has fallen from levels of 1950 to 500, I will be very wary of calling a change of trend easily. I would prefer to play any rally as a counter trend rally and be on the lookout for signs of exhaustion of the rally. A bottom may have formed, but there can be retest of bottom, or stock price can come down to form a higher bottom, so on and so forth.
Basically at every swing, there are people holding the stock with stuck positions. These guys are waiting to unload once their prices are reached. That adds to supply. So with charts of these kinds , there will be plenty of resistances on the way up.
A much easier way (according to me ) is to look out for stocks which have minimum resistances on the way up. Stock prices tend to follow pathway of least resistances. That means stocks in strong uptrends and that usually happens in something that is in fancy. Currently those sectors seem to be automobiles, FMCG, cap goods, etc. (financials do seem to be making a comeback of sorts, but it seems early days as of now. ) For other companies you have put up, you can apply some/all of the above principles and try to figure out how things are panning out. You can put those up on any technicals thread. I will put those up at an appropriate thread at a later time.
Hitesh sir, what are your views on paper sector stock charts (west coast paper, jk paper)?
Hi Hiteshji,
Any view on Federal Bank and Karur Vyasa Bank? Federal seems to be doing well after the results and Karur seems ro have broken out of a trading range yesterday/today. To me, they look interesting.
Also Jamna Auto in the autocomponent industry, if you would have a view.
Regards
Nikhil
@hitesh2710 Sir, Greetings! I am a beginner investor who have greatly benefited by being in this forum more specifically this portfolio Q&A page. A book that you have frequently recommended is “The Five Rules for Successful Stock Investing”. This book teaches us to use morningstar data that was previously freely available. Over past few day, I am no longer able to access the report. Sir, can you please advise about an alternative way of stock evaluation in absence of morningstar.in.
