Hi Hitesh Sir,
Can you please share your opinion on the charts of HCL Tech? The stocks after making a bottom at around 870 (May 2021, July 2022 and September 2022) seem to have found the base and have started inching towards their all-time highs.
It has already been 2 years of bear market in IT Stocks and pessimism has not faded yet. Time to go contrarian?
1 Like
The whole large cap IT pack has been in a long consolidation mode since a long time⌠Some of them might be breaking out, but I donât track the sector or any stock in the sector .
6 Likes
we are almost hitting the 200 DMA just short of 50 odd points on nifty. Any thoughts?
1 Like
@hitesh2710 Hello sir,
Can you please share your opinion on bectors food because currently at quite high valuation but the business has a literally long way to go because they are planning out to pan out their distribution to whole country
4 Likes
According to my charts, Nifty 200 day exponential moving avg is at 18646 ( can vary by a few points according to platform you use ) and 200 day simple moving avg is at 18466. I donât know how you estimate that itâs 50 odd points short of 200 dmaâŚ
Coming to actual factual numbers, Nifty made three bottoms in vicinity of 19200 in August 2023. Intervening peak was at 19585. This was a sort of double/triple bottom kind of pattern confirmation on shorter time frame and after that Nifty rallied to a high of 20222. Since that high we are in a corrective mode and around 19700 levels as of now⌠Need to see how the next few days pan out.
@ConsistentLearners I donât track Bector Foods.
10 Likes
Dear @hitesh2710 ji
I would like to hear your views about the recent announcement of Glenmark Pharma selling 75% of itâs stake in Glenmark Life Sciences to Nirma, which is a relatively new entrant in the pharma space.
Nirmal will get 75% plus shares that will be tendered in the mandatory open offer process. There is an old history with Nirma not treating the minority shareholders well. Times have changed now. Any advice for shareholders of GLS that want to hold their shares as the GLS business is quite good?
1 Like
Hitesh ji, Very nice work you are doing here. Your clarity of thought is awesome.
Just one query.
In some of your posts , you have commented on chemical sector. Your point is , Chemical sector is basically a commodity sector amd recently in last 2 years, it had caught market fancy. Companies like Deepak Nitrate, Alkyl amines have been 7-8 bagger from 2019. But in last 1 year, all these stocks are down by 30% or more from its ATH. So you are concluding that , market fancy has been off now and these companies will take lot of time, may be years , to come to their recent glory, from your past experience of market fancies in past sectors. It appears that your conclusion is correct. So those retail investors who like me, who are invested in these companies are essentially caught up in these companies. But can it be so, that most investors also advise that never invest into market fancies and stay away from them, rather invest into such sectors which are beaten down and not in the current fancy of the market. If we go by that logic, then is it the best time to invest in chemical comanies? I remember Fundoo Professor video about âOpposite of good can also be good.â. So what can be right really? Staying invested or coming out of it? Recently I read Pulak Prasad Book. He has advocated Permanent ownership in good companies. So those companies which are not doing good pricewise, we still need to hold on to it, irrespective of market fancy. Kindly advise. Thanks in advance.
5 Likes
Chemical sector had a strong rally mainly due to some strong industry specific tailwinds. Most important among them was the shortages in key chemicals due to shutdown in chemical companies in China due to pollution control measures. To that was added the China plus one theory post Covid. All this resulted in a heady cocktail which led to big crazy rally in chemical sector and a lot of stocks went up manifold within a short period of time.
The run up had been so strong that it occupied investor mindspace, and even after it has been in the doldrums since many months , a lot of investors are still not able to figure out the commodity nature of the business. While most of the companies in the sector are commodity type companies, there will be a few of them which because of their products, or business models, or niche will be less commoditised and these can be considered. But for that a lot of homework needs to be done to understand the business and come to the right conclusions.
Regarding investing in neglected sectors, we have to understand what we mean by neglected sector. According to me, a neglected sector is one where the cheapness of stocks on conventional parameters is obvious. Say based on PE, P/B etc. Few months back, the PSU stocks basket was one such space. Since past 3-4 quarters, these banks had been posting extremely good Y-on-Y growth in numbers, with improvement in asset quality, good management commentary and some of them had amazing dividend yields of more than 5%. Consider REC and PFC (though slightly different from PSU banks, but can qualify as PSU NBFC) which had nearly 10% or more dividend yields. And now see the kind of returns these companies have generated. Look at the kind of market apathy these companies and sectors suffered and since how long⌠That is an example of neglected sector.
Pulak Prasad advocates buying into good companies for very very long term. But here too, we need to define what a good company is⌠Can it be a chemical company which is vulnerable to raw material prices volatility, end product demand fluctuations etc? For what a truly great company is, we need to go to Warren Buffettâs definition of a good company. Or read Peter Lynch on consistent growers or stalwart companies. These may qualify for long term or near permanent ownership. ( In this day and age, I am not a big fan of commiting myself to permanent ownership of a business. But thatâs also partly how I am wired to think. 
)
@newone I donât track Glenmark or any of its group companies or their corporate developments.
48 Likes
Sir, I have a question.
I did not know when technical analysis got introduced to retail participants. Institutions may have got access to TA, and other data and price related technologies decades ago, and as such, there may have existed certain market inefficiencies in the past in our market, due to information asymmetry and tech not reaching retail.
Efficient market hypothesis may just be a hypothesis, but considering the availability of information, the reach and speed at which everyone has access to it now, and many things pertaining to the market are available for free on internet, a lot of things are becoming common knowledge, and as such, have you observed anything in particular in your experience which you think has changed w.r.t TA and will remain so, and will not go back to its initial state?
To put it simply sir, if everyone knows about candlesticks, patterns, trend lines, support and resistance, Fibonacci etc, and take actions based on these aspects, and not panicking and selling unlike before, has the chance of a view based on TA becoming true is less now, or TA is TA, has been the same for centuries, and will remain the same, it is the fundamental investors who move the price in general, for them TA does not matter, their focus is on the business and valuations, and there will always be humans emotions present, so the probability of TA becoming true or false will always be the same, and can be relied upon, with caveats?
Thank you.
8 Likes
Dear @hitesh2710 -ji,
Your selfless service to this great forum is unmatchable in terms of educating the retail investors like me.
Words are not just enough to appreciate your kindness with respect to sharing your vast knowledge.
To be honest, Iâm a kind of a person who never looks in to charts. But after reading your posts Iâm slowly changing my perception.
I was referring regarding KVB near multi-year high via this post (Bull therapy 101-thread for technical analysis with the fundamentals - #2272 by nirvana_laha) KVB seems very near to clear its 8 year high around 135 to 140 levels.
I have depicted my understanding via 2 pictures below.
To my limited understanding, I see 2 consecutive cup & handle in different time periods.
Near handle area, volumes are diminishing.
Additionally, KVB is moving in a tight range/not going down in-spite of the ongoing downtrend in overall market. I see this as a strength.
However, Iâm not sure whether my understanding is correct or not.
Iâm also not sure about the 2nd chart. Shape of cup & handle is not ideal⌠
Inputs/thought process from your side with regard to this would be a good learning going forward.
Fundamentally, KVB is increasing the profits in last few quarters & NPA is also on decreasing trend.
Thank you.
3 Likes
Both technical analysis and fundamental analysis have been in vogue since decades. I think Homma introduced candlesticks a few centuries ago. And itâs still being used by people practising TA. You will find people swearing by Ben Grahamâs tenets even now after nearly 8-9 decades.
The most recent fad in technical analysis is swing trading and breakouts. You will find a lot of videos on Youtube giving a list of breakout stocks every week, some every few days and so on. A lot of Whatsapp groups related to investing and TA will have plenty of breakout patterns being shared. Once a lot of people start using these things without proper understanding, the efficacy of these things will reduce. That is one of the reasons why we are seeing a lot of breakouts going in for retests, and these retests are often frustrating. What these short cut methods fail to teach is patience and temperament. The latter are two important aspects of investing and trading that are less emphasised. These are the very reasons why a lot of retail investors with half baked knowledge and skills tend to over commit and panic and this leads to a lot of wild swings in markets. Itâs probably one of the reasons why we have market cycles that have become very short.
The way to navigate around these kind of problems is to broaden your horizon, and inculcate some fundamental analysis also while going in for technical analysis, or vice versa. And try to go in for some well tested methods which few people follow. When everyone is looking around for multiyear breakouts, it might make sense to go around looking for bottoming formations. Or something else.
I think both TA and FA will continue to work and reward those who keep learning, improving and have sound processes and temperament.
47 Likes
For investing purposes, try looking at weekly or monthly charts, especially in companies with good/improving fundamentals. On monthly chart of KVB, cup and handle is clearly visible if you draw a horizontal line at 116. On daily charts there will be a lot of noise and whipsaws, so better focus on slightly longer term charts, esp if you are into investing.
And as discussed in earlier post, there can be a lot of retest like moves, and we have to be ready for that, or even better, learn to take advantage of those moves.
13 Likes
Hello Hitesh Sir,
I have few doubts on the cup and handle pattern as seen in KVB on a monthly time frame.
- Isnât the cup too deep and the correction in the cup more than ~>30% as stated by Oâ Niel (KVB - Max. - 116 , Min. - 22).
- Oâ Niel also mentions that major part of the cup should be formed above the average depth, which here doesnât seem to be the scenario.
Similar example is the Coforge cup and handle on weekly time frame.
If you would be so kind to please help me clear these doubts. I am pretty new to TA and categorised this cup and handle as a loose cup and handle pattern due to the above mentioned points.
Thanks in advance.
Sir I think if more people start using these things without proper knowledge, the efficacy of proper practices in FA & TA will increase. Improperly followed investing and trading practices will increase the size and number of opportunities and make markets more inefficient & a better hunting ground for professionals.
1 Like
In my humble opinion, âPermanent ownershipâ could sometimes be a trap. If a company has been giving consistent returns for years together and suddenly goes into consolidation for say, 2 years, it might probably prudent to switch over to some other fundamentally sound company that is performing much better during this period. Any particular business may face trouble for some period and we always have choice to come back.
Good Day @hitesh2710
Hope you are doing well
Recently most people that I know off : people are just investing by the name so called âordebook investingâ
The kind of rally that was in railway just scares me off that too 4x within a yearâŚ
How one should look at sectors like power, railway or construction wherein the major orders for these are government?
Because my past experience in public sector is too bad, how one should look at order book investing and given the fact that elections are close whatâs your views on order books backed by government, is there any risk?
1 Like
Whenever you find a sector in favour, you will find froth. Initial phase of the rally is with disbelief, then it progresses with acceptance, and then comes frothy narratives. Order book investing is a kind of frothy situation. But this kind of stuff can also keep going on for months, before shit hits the fan.
Riding momentum is a specialised skill. Itâs not everyoneâs cup of tea. While riding momentum, many a times there will be extreme discomfort while justifying valuations. (Does not mean we have to ignore fundamental picture altogether). But we should know that these kind of rallies tend to last much longer than what most people expect.
What I do is plan staggered exits once I see parabolic moves start happening. ( with sector in fancy, usually there are parabolic breath taking climatic moves⌠e.g mazgaon dock ⌠)
After that even if stock price trends to go higher than my sell price, I donât regret my decisions, because we cannot sell at the absolute top.
Above is the kind of framework I use while riding momentum stocks and sectors.
Railways, defence seem to be the sectors in fancy as of now. And some of the stocks are in the parabolic upmove phase. One needs to exercise caution while making a fresh entry.
For KVB details, you can look up chart posted in Bull therapy thread. The chart is posted with details.
25 Likes
Dear Hitesh
Can you share your views on Shipping Corporation of India. It is within Breakout range. The Baltic dry index is improving which I feel is positive for company.
Dear Hitesh Sir , on the same note it will be great to get your views on Cochin Shipyard and GE Shipping . Cochin shipyard is transforming fundamentally inline with Govt vision to make India a significant contributor to shipping industry by 2030. They have actually started bagging orders from Europe for small sea vessels , some 2400 odd nos are due for replacement, they have got order of 14 so far plus their AR talks about lots of initiatives. GE shipping again in line with baltic index, last several qtrs have been good for them. Thanks.
Fundamentally I donât track Cochin shipyard, or GE shipping or Baltic index. But the chart of Cochin shipyard is a beautiful example of a rounding formation and then a big upmove. Below 700, the consolidation took form of a rounding formation and once it broke out above that levels, it went up to post highs of 1258 and now again seems to be in a pause mode.
@girishsanghavi I donât track SCI.
Current times are good times for anything with a PSU tag attached. And may they continue. But again like other rallies of favoured sectors in the past, I consider these are sectoral rallies with strong tailwinds and have to be dealt with accordingly. I would not dare to project earnings beyond maybe 2 years. With govt companies a lot of unforeseen things can happen. But as long as the music lasts, we should dance, but stay close to the exit doors when music becomes too loud.
24 Likes