sector update – Investing Class

India – weekly insights (Oct 2, 2020)

October 3, 2020October 3, 2020 investingclass

What a week this was! Just when it felt that the market will collapse, Nifty posted +3.32% WoW performance, led primarily by Banks (+6.02%).

Sector performance:
#Auto +3.87%
#IT +2.45%
#Pharma +1.96%
#Media +6.02%
#Banks +6.02%
#Metals +4.08%

On an index level, while the performance on the surface looks great, the buying has been on declining volume, very typical of a bear market bounce. Nifty is still around the 50DMA. Before the news about POTUS catching Covid, it would have been reasonable to assume that Nifty would dance around the 11300-11400 for a couple of days before potentially rolling over. Might not take that long now specially given how US indices reacted last night..

Another factor that is weighing heavy on the outlook for India (and Emerging Markets in general): Dollar. It seems to have reversed from the downtrend that began around Jun-end and is making higher lows. Certainly something to keep an eye on.

Coming to specific names, IF the market doesn’t fall apart, the following names can have a place in one’s long portfolio as they have been acting well in price action compared to peers:

TVS Motor Company: It has been one of the best auto stocks, consolidating since Aug-end and closed above Aug high.

Hero MotoCorp: Another 2-wheeler company which started its consolidation back in end of August. Challenging highs but general market weakness keep it in check.

Godrej Consumer Products: Coming out of a 2 month base on good volume

Dabur India: Another FMCG name coming out of a one month base. It is choppier than I like, but depends on one’s risk appetite (long term trend is up).

Tech Mahindra: Strong price action last week, came up like a rubber band from 20D VWAP line.

Mindtree: one of the best IT names, consistently being accumulated by investors:

On the #Pharma theme, one could throw a dart at any company and have made a killing in last few months due to the covid related tailwind. Following 2 names look interesting to me given the growing revenues and earnings:

Laurus Labs: consolidating right now after more than tripling since March

Granules: Been consolidating in 370-400 area, with earnings season approaching, this should be on your radar because if it works, it can pay very well.

Now comes the fun part.. What to short and when??

HDFC Life Insurance: Short on bounce to 580-585 area with a Stop loss @ 592. Target 540.

ICICI Prudential Life Insurance: Short on bounce to 426-430 with a Stop @ 450. Target 380.

ICICI Bank: Short @ 369 with stop @ 380. Target 324. Last week’s rally in banks and financial services companies is providing some good opportunities for hedging the portfolio.

Do note that shorting is specially risky as the beaten down stocks tend to bounce very violently. So have to manage the risk with stops appropriately.

All the best!

Charts sourced from investing.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: This is not investment advice, please do your research before committing capital. Stop loss levels mentioned are indicative for the risk I would be willing to commit on these trades with my trading style. Everyone’s different, commit what you can stomach losing.

India daily update (Sep 29, 2020)

September 29, 2020September 30, 2020 investingclass

Nifty fell short of clearing the 50DMA, closed at 11222.4, down 5bps for the day. It cleared the key level intra-day and then got rejected. We noticed some distribution across few leading stocks as well.

The banks gave back almost half of the gains from yesterday:

Sector wise, Metals, IT and Auto outperformed today:

Outlook: I expect Nifty to stay volatile around this 50D level. So I think it’s a good time to add some short positions opportunistically.

Plenty of stocks were weak even during the recent Nifty bull run (April 2020 – Sep 2020). These particular stocks also got the momentum from the rally of Friday and Monday giving us a good spot to add some shorts. In case the market rolls over, these stocks will likely provide a better downside exposure. I highlighted one such opportunity today (link here).

All the best!

Charts sourced from investing.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

India daily update (Sep 28, 2020)

September 28, 2020September 28, 2020 investingclass

Fair to say that the market seemed to be in a rush today (Nifty +1.6%). Sector split below:

Don’t forget that this is only the 2nd day of rally post the sell off that started last week. Volume on both up days was < volume on down days as shown below. 11302 is a key level to watch, it will guide us whether putting risk back on is appropriate.

Few stocks that seemed interesting today:

Granules: strong price action following the gap up day on Friday. Can potentially use SL @ 380-382.

Vaibhav Global: It’s potentially setting up to breakout higher. Can use SL @ 1800-1780 range. It’s a low liquidity stock, hence more appropriate for retail size.

Garware Technical Fibres: Broke out today from previous highs on strong volume. Can use SL @ 2015.

Tasty Bite Eatables: It got quite beaten down in the sell off and moved below 200 DMA. Today it managed to stay above 200 DMA for 2nd consecutive day which indicates that the downtrend is probably over in this name for the medium term. (SL @ 10510)

Be careful with adding new positions at this time. If you feel you are forcing trades at this time, it is better to sit it out. Highly likely that the trades taken in this environment will be shaken out.

All the best!

Charts sourced from investing.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.