Justdial - Head & Shoulder breakout

Justdial has been in down trend since Jan 2015. The stock has been continuously witnessing a fall and the stock is down by whooping 75%. This head and shoulder breakout can be a start of short term uptrend in the stock.

Ujjivan and ICICI Pru Life - Recent IPOs with an attractive proposition

Ujjivan  and ICICI Pru Life are the two IPOs launched in recent past. Both the stocks are looking lucrative now.

Lets go one by one:

Ujjivan has strongly surpassed its major resistance yesterday to close near 424. You can see on the chart below that that after posting high near 530 the stock has seen a healthy correction which took the stock to around 275. This was very near to its listing price of 230.

Here on we can expect the stock to continue the momentum.

ICICI Pru Life after its listing in Sep 2016, was trading in a broad range between 330 and 285. The stock has broken out of this range on 10th Jan. It then went up to post a new high of 363.50. The stock then went into a correction and tested its breakout level as shown on chart. We can expect the stock to continue to trade with same momentum.




Analysis and actual entry in a stock are two different things. While analysis gives you broader picture about the stock movement, the entry exit levels gives your more refined idea about the risk management. On this blog most of analysis of most of the ideas is given. If you are keen to know get the detailed recommendations like Entry level, Stoploss, Target and exposure for a particular script with regular followup on action to be taken, please subscribe to our paid services. We have kept the costing of services very low to make it easier for even the retail investors to participate in markets.
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BHEL - Head & Shoulder breakout

Bhel was trading in a downtrend on daily chart since Sep 16. Stock was trying to get into a new cycle of higher top higher bottom from its existing downtrend. For short term, the current Head & Shoulder breakout can act as confirmation to this theory.

Petronet - Fresh Flag breakout

For about last 12 weeks this stocks was in consolidation phase. Consolidation is actually a period of contraction. We expect price to remain stagnant during contraction. Contraction periods are usually followed by expansion. Expansion means prices move in either direction. You can see below weekly chart of Petronet. A clear breakout of consolidation is an indication of start of expansion phase.

Divis Lab - grab the 50% discount offer

Divis Lab was trading near 1350 in Sep 16. The stock is available near 700 while writing this article. No one is willing to touch it even at this level. 

Lets try to understand whether Divis Lab is an attractive buy at this level.

Here is quarterly (Yes...one candle per quarter...though little long term, its worth discussing here) chart of Divis Lab

 

The stock is trading near a substantial support area. Biggies would want to buy at this level.

I am not saying the stock will start moving up right away from this level. The level might be tested couple of times. The stock may get into sideways trend for some time.

If you have patience and you are ready to wait for some ( a year or so) time there is an opportunity to earn 50% returns here.

Closer look:

If you look a little closer on the basis of daily and weekly chart, you will find that the chart structure is becoming flattish indicating slow and steady buying at current levels. The buying area is between 600 and 700. So may want to average between this price. 

You can look to book first profit near 900-930 and later near 1100-1150

Have your risk management in place and you have a nice trade ready to be served.

Weekly Chart:

Jubilant Foodworks - Low hanging fruit?

Monthly chart - trading near an attractive support

J K Paper - Ascending Triangle breakout

SAIL - change of cycle

Steel Authority of India, the steel giant, is seen in the process of changing its cycle from 'Lower Top Lower Bottom' to cycle of 'Higher Top Higher Bottom'

Trident - breaking to all time high

Both below are weekly charts to Trident. 

In first chart, larger picture exhibits the strength on chart.

A closer look in the second chart shows an ascending triangle breakout. 

What and how of Nifty before Budget

Larger Picture:
Here is larger picture of Nifty with the help of monthly chart. You can see that on monthly chart Nifty is taking repeated support on a trend line. This trend line traces back to March 2009. This trend line exhibits a strong support to Nifty in 8000-7900 range. On the monthly chart, last month Nifty has formed a bullish hammer. As a follow-up to this monthly hammer, Nifty is in process of creating a bullish green candle. This bullish green candle is yet to form completely. Larger trend is up.
There is a resistance to Nifty in 8500-8590 area. On this larger time frame Nifty is still not in the region which can be called as over bought. We can expect the uptrend to continue. Correction is a part of an uptrend and is also healthy for uptrend. One such correction can not be denied once Nifty reached its resistance.
Monthly chart:

Closer Picture:

Nifty on its Weekly chart is still not giving us symptoms which is an indication of a downside correction. However some pressure is seen, if you carefully observe daily chart, Nifty is trading in overbought zone and also has its resistance nearby. Major event of budget is schedules on 1 Feb. This event can have large impact on Nifty. Technically a fall in Nifty to its support near 8250 will be an opportunity to add to the positions, as the larger picture remains positive. 

Markets usually trades nervous before important event and takes the direction on the day of the event.

The arrows on weekly chart below exhibits important areas.

A picture still closer:

On daily chart one can see that Nifty has started experiencing some pressure. Nifty is also trading in overbought zone and has negative divergence. This is an indication of a correction. However the correction may not be substantial looking at the positive picture on larger time frame. However this is definitely not the time to go long. Wait patiently for the markets to correct and then enter. If you have profits in existing positions, current time may be the right time to book it. For me 8506 and 8255 are crucial levels. 

At Bonvista Equity Research we believe in simple ideas to make money in stocks. Right analysis with good money management and risk management is the key to earn profits in markets. To have look at our Premium Service visit our website Bonvista Equity Research.

NTPC - Breaking all recent hurdles

Zoomed Image on weekly scale

Larger Picture on weekly scale

Tata Communucation - Ready for a Flag Breakout

Tata Communication is trading in broad range since begining of November. An ascending triangle on weekly scale is formed with this 2 month long consolidation. Observe the activity in volumes this week. Possibility of a breakout?

Fortis - Rectangle breakout

Fortis is breaking out of 10 months long rectangle. Here is weekly chart of Fortis, though the weekly candle is not closed as the week is yet to complete. We can anticipate that it will close with the nice breakout.

ACC - a double top and now a double bottom

ACC monthly chart below. Looks attractive specially because of low risk.

SRF - obeying the support

SRF Weekly chart. This is a classic pattern. A rectangle breakout is being tested. Expect a rise in demand here.

Havells - On a bouncing spree after a nice Correction

Ready to spell a new move after a nice correction. Weekly time frame.

Asian Paints - not yet late

This post can also be treated as a followup post to my earlier post - 

5 hot stocks & their levels- to 'enter' during correction

Asian Paint is one of the stocks I had recommended at that time. Check its recent reaction on the chart below. 

Sriram Transport Finance - Buy Cheap

 At current levels Sriram Transport Finance is available at a discount of a 40%.
Strong support area and price till next price hurdle has lot to offer. Weekly time frame here.

Ajanta Pharma - Time to grab

This post can also be treated as a followup post to my earlier post - 

5 hot stocks & their levels- to 'enter' during correction

Ajanta Pharma is one of the stocks I had recommended at that time. Check its recent reaction on the chart below. 

Havells - beginning of trend change

Cerebraint - A breakout

Voltas Limited - Seem to be ready for short term gains

A typical structure is formed on Voltas today. The stock has closed above its earlier top. The earlier top is marked with a black arrow on chart. This hints us at a change in trend from current down trend to an uptrend for short term.
Increase in volumes hinting at an increased buying in this stock.

Entry in the stock to be managed properly as a small pullback can not be denied from current levels.

The upcoming resistance areas are marked with red line on chart.

Disclaimer: The contents produced here are purely for educational purpose. They should not be construed as buy/sell recommendations. I am not a SEBI registered Analyst or Investment Advisor. Readers are advised to consult their Investment advisor before taking any decisions based on above write-up.  

Reliance Industries Ascending Triangle

Reliance Industries

A frustrating consolidation continues in this large cap. This consolidation is referred to as Ascending Triangle. A breakout is expected after the consolidation. This time since this is an ascending triangle the breakout can be on upper side of the price. 

I have started creating small  videos in Hindi on the same topic. To check video click this link

https://youtu.be/KBuSgll3tSs 

Disclaimer: The contents produced here are purely for educational purpose. They should not be construed as buy/sell recommendations. I am not a SEBI registered Analyst or Investment Advisor. Readers are advised to consult their Investment advisor before taking any decisions based on above write-up.  

Deep Industries - Fresh breakout to uncharted territory

Deep Industries caters to the services required by Oil and Gas companies like ONGC and Reliance.

Friday's chart shows a fresh breakout in Deep Industries.
This breakout has come with large volumes. The stock is ready for next move. Breakouts are followed by consolidations. We do not know whether to stock will continue the movement or it will pause for a consolidation. I have marked the support areas on chart below. Entry levels can be tricky.

Entry 1- 285.45
Entry 2- 278
Entry 3- 261

When trading breakouts, the Risk Management becomes more important. However this pattern can give some quick gains.

To understand the risk of buying breakouts, you can read this article-

Buying 'Breakout' Vs buying 'Near Support'

Disclaimer: The contents produced here are purely for educational purpose. They should not be construed as buy/sell recommendations. I am not a SEBI registered Analyst or Investment Advisor. Readers are advised to consult their Investment advisor before taking any decisions based on above write-up.  

You don't need 90% success ratio to make profits

 To begin with (for those who are new), lets spend some time in understanding as to what is a 'Success Ratio" in trading. Success ratio is nothing but the number of winning trades out of the total trades taken.

For example - If a trader takes total 10 trades, books profit in 7 trades and book loss in 3 trades, his Success Ratio is 70%. As he has 7 winners out of 10.
Or
Suppose a trader takes 100 trades in one year. He books profit in 65 trades and books losses in 35 trades. Then his success ratio is 65%.

Now since we know, what the success ratio is, lets move on to understand why am I saying that you don't need 90% success ratio. Let me put this statement this way- you don't necessarily need beyond 65% success ratio to make money in markets.

However, on the contrary, most traders / investors in stock markets are obsessed with high success ratio. They feel Analysts and Researchers have methods to precisely predict the stock movement. This is why many advisers and tip providers try to take an advantage out of this situation. Most of them claim that they have more than 90% success ratio. I am not saying that the research is not required. However, giving undue importance to research and ignoring some other important aspects of trading can be a blunder.

You have to finally break your belief and trust that Risk Management and Money Management are the most important aspects of making money in trading. If I have to weight Research against Money and Risk Management in trading- I would give weight of 60 out of 100 to Risk and Money Management. I would give a weight of only 40 out of 100 to research.

Look at how a simple Risk Management Technique can benefit traders-
The technique is called as Risk Reward Ratio. (Stoploss to Target Ratio)

Here is an example of a trade-
Stock A recommended to be bought at Rs 150 which has a stoploss of 140 and a target of 180.

Risk = Entry-Stoploss = 150-140 = 10
Reward= Target - Entry= 180-150= 30

So the Risk Reward Ratio in case of Stock A is RR Ratio= Risk/Ratio= 10/30 or 1:3.
This means that trading in stock A has risk of Rs 1 for Reward of every Rs 3.

Here is Why I am saying that you don't need 90% success ratio to make profits in market.

Say, a trader takes 10 trades during a specific period of one month. Here are 3 different scenario with different Winning Ratio and same Risk Reward Ratio.

Scenario 1- 
Winning Trades- 7
Loosing Trades- 3

This means the Winning Ratio is 70%

Lets assume all the trades have RR Ratio of 1:3. It means each trade profit's Rs 3 in each winning trade and looses Rs 1 in losing trade.

So Reward (Profit) = 7 (winning trades) * Rs 3 (profit in each trade) = Rs 21 (This is profit ignoring transaction charges)
Risk (Loss) =  3 (loosing trades) * Rs 1 (loss in each trade)= Rs 3 (This is loss ignoring transaction charges)

Total Profit = 21-3 = Rs 18

Scenario 2- 
Winning Trades- 5
Loosing Trades- 5

This means the Winning Ratio is just 50%

Lets assume all the trades have RR Ratio of 1:3. It means each trade profit's Rs 3 in each winning trade and loses Rs 1 in losing trade.

So Reward (Profit) = 5 (winning trades) * Rs 3 (profit in each trade) = Rs 15 (This is profit - ignoring transaction charges)
Risk (Loss) =  5 (loosing trades) * Rs 1 (loss in each trade)= Rs 5 (This is loss ignoring transaction charges)

Total Profit = 15-5 = Rs 10 
It means you can make profits even if you have 50% profitable trades.

Scenario 3- 
Winning Trades- 3
Loosing Trades- 7
( I am sure even with little analysis one can achieve this)

This means the Winning Ratio is just 30% and trader is losing out on 70% of the trades.

Lets assume all the trades have RR Ratio of 1:3. It means each trade profit's Rs 3 in each winning trade and loses Rs 1 in losing trade.

So Reward (Profit) = 3 (winning trades) * Rs 3 (profit in each trade) = Rs 9 (This is profit - ignoring transaction charges)
Risk (Loss) =  7 (loosing trades) * Rs 1 (loss in each trade)= Rs 7 (This is loss ignoring transaction charges)

Total Profit = 9-7 = Rs 3
Wow that's the news. Even a poor fellow with 30% winning trades (Success Ratio) is making profit.

And this is what it is.

You don't need 90% winning trades to make profits in market. You need proper Risk Management along with proper Money Management.

In my Trading Advisory Application the focus is on Risk and Money Management. Trading Advisory Application is an online tool built by us to reach our subscribers with detailed reasoning of and analysis of a trade. Here you will find that every recommendation is coupled with an analysis and reasoning. The trading style is – Positional with delivery in cash segment. Objective is to make 30% to 50% profit during the year.

Click here to know more details.

Disclaimer: The contents produced here are purely for educational purpose. They should not be construed as buy/sell recommendations. I am not a SEBI registered Analyst or Investment Advisor. Readers are advised to consult their Investment advisor before taking any decisions based on above write-up