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5 Tips on How to Trade When Sensex is at 60k by C.K. Narayan

5 Tips on How to Trade When Sensex is at 60k by C.K. Narayan
by 5paisa Research Team 19/10/2021

Stock markets in India have been trading at a strong clip over the last 18 months. As a matter of fact, in this time period, both the Sensex and the Nifty have been hitting new highs and creating wealth for investors. However, now that the Sensex is at 60k, it has become important to review portfolio gains and create a strategy for the way forward. If you are muddled with questions like what to do now, should I book profits or continue the ride, should I invest more money or simply do nothing, then you should definitely read on. 

Guest:
Dr. C.K. Narayan, Founder of Growth Avenues, Chartadvise &  NeoTrader and Chief Investment Officer - Plus Delta Portfolios


1. Is the market overheated at present or do you see room for the market to move up further?

The market has been moving up since the last 18 months. It has been a relentless upside and this relentlessness is worrying people. The Sensex is at 60K. We usually expect a normal correction of 10-12% per year and frequent corrections of 4-5% in between but, over the last 18 months, we have only seen a correction of about 3%. People have been worried about a correction since April-May 2020 and the lack of correction is a huge source of concern. It is stopping seasoned people from committing completely to the market.

The share market started its ascent in the depths of the pandemic, when nobody knew what to expect with the lockdowns and other issues. Now the Sensex is at 60K. We could not understand why the markets were moving aggressively and therefore, nobody built major positions. In fact, positions are lower than normal because people are wary, ensuring that there is no position overhang. This indicates that the growth trend could continue further based on various factors of over heatedness.

Everybody is rightly sceptical and though there is a fear of missing out, nobody is willing to overcome it and come to the share market with high investments. People need a reason to flock to the market and there is no dearth of money. Nearly 30-40 billion dollars of money have come in and more is waiting. In this scenario, it is advisable to await the next quarter results and, if the upside trend continues, it is time for people to gradually enter the markets over the shorter term. Equities are holding strong across the globe, money flow is intact and liquidity is high, indicating this is a good time to build positions. 

2. With the Sensex at 60K, how can technical analysis barometers be used to identify stocks which can make good investments over the next 10-15 days?

It is best to take a structured way to understand the market. Technology has heightened volatility and reduced sustained directionality. Harness technical analysis and technology to identify stocks. Avoid information overload and use powerful software. For instance, if you consider Maruti stocks, the shares are facing a year to date decline. Recently Maruti has rallied in a short-term bounce but software indicates that it is currently within a cloud and therefore not a wise buy. 

3. What is your view on some of the recently listed IPO stocks and what sectors do you think will hold strong in the near future? Which are the best stocks to buy now?

I will treat the newly listed stocks as a single segment. Strong companies have come into the market and these IPOs have raised the market cap. These are clean stocks with no baggage so most definitely pay attention to new listings, especially those in niche segments. Pay particular attention to new IPO stocks which are making strong highs. If a month has passed, people who invested early have made profits and moved out.

If the stock is still moving up, it indicates that institutional investors are buying up the stocks. Big players are coming in, meaning the stocks are performing well. IndiaMart is a good example of an IPO making nice patterns and offering strong profits. People are holding such stocks for long-term gains. Focus on this segment and even if you go wrong in 2-3 out of the 10 new stocks, the money you make in the rest will help you gain back whatever you may lose.
  

4. How can we scan the best stocks to buy now and which stocks are making good movement in the first 15 minutes of the market?

Invest in a good scanner and have a strong understanding of technical analysis. If you do not know technical analysis, you can scan based on price action. If the price action is strong, check volume action. If there is large volume and good price action, there is strong potential for movement. Parameters of the scan should be built in well. Pick 4-5 good stocks to scan and you can make good returns.

5. What is your view on the short-term share market?

The market has recently fired some opening shorts. The Sensex is at 60K and Nifty reached an all-time high last week, at opening, and this was an artificial high. This is not a good sign. This week’s candle pattern indicated a dark cloud cover, which is a warning to be alert. This week, we almost hit the previous week’s low and this has not happened since July. There is a big dark cloud cover and this bearish candle was last seen in January 2021, so there are small warning signs which we should heed.

The second warning came when a short-term trend line was broken during the decline this week. The whole week has seen a decline. When you see a decline breaking a trend line, it is note-worthy. Recent short-term breaks have happened through consolidation and not declines, so that is another warning from the market.

Thirdly, throughout the upside trend, the momentum did not show any divergence pattern. The divergence indicates a lack of momentum which is not accompanied by nuance. This finally happened during this week’s trade.

These are all tell-tale warning signs in the short term so prepare for the next week with extra padding as the market could be fierce. In the short term, there is a small question mark and we have to see if there is a follow-up. However, in the longer term, as long as the market remains slightly south of 17000, there is no need to worry. If these lines are crossed, there should be caution and investors should ensure that accrued profits do not get negated.

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These stocks see huge volume burst in the last leg of the trading session.

These stocks see huge volume burst in the last leg of the trading session!
by 5paisa Research Team 19/10/2021

Manappuram Finance, AIA Engineering and JK Cement have witnessed volume burst in the last 75-minutes of the trade.

As the saying goes, the first and the last hour of each trading session is the most important and active in terms of price and volume. More so, the activity in the last hour is said to be of utmost importance because most of the pro traders and institutions are active at this time. Hence, when a stock sees a good spike in volume in the last leg of trade along with price rise it is said to be the pro and institutions have a keen interest in the stock. Market participants should keep a close watch on these stocks as they can witness good momentum in the short-medium term.

So, based on this principle we have shortlisted three stocks, which have witnessed volume burst in the last leg of trade along with price rise.  

Manappuram Finance: The stock of Manappuram Finance outperformed the broader as well as frontline indices as it ended the session with modest gains of 0.30% on Tuesday. Interestingly, over 50% of the total traded volume of the day was witnessed in the last 75-minutes. Hence, market participants can keep a close watch on this stock. In addition to this, the icing on the cake is that the stock closed near days high.

AIA Engineering: The stock managed to rebound from the lower levels, and it settled above the 1900 mark. The stock witnessed a massive jump in volumes in the last 75-minutes of the trade. Over 80% of the total traded volume of the session was seen in the last hour of the trading session. A bullish bias in the price was also witnessed in the last 75-minutes. Considering the robust volume move in the last leg of the session, traders can keep an eye on this stock.

JK Cement: Even though the stock ended in red on Tuesday with a drop of over 2%, it witnessed a good spike in volume in the last 75-minutes of the trade. Over 50% of the total traded volume of the day was witnessed an hour before the closing bell. Furthermore, the stock price rebounded from the lower levels with a surge in the volumes. Keep this stock on your radar.

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Trending stocks: Keep a close eye on these small-cap stocks for 20 October 2021.

Trending stocks: Keep a close eye on these small-cap stocks for 20 October 2021.
by 5paisa Research Team 19/10/2021

BSE Small-cap corrected by 1.79% and underperformed broader markets.

Headline indices Nifty 50 and Sensex recorded new highs during early market hours, but failed to hold the same and ended the session losing 58.03 points and 49.54 points respectively from yesterday’s closing. BSE Small-cap corrected by 1.79% and underperformed broader markets.

Keep a close eye on these trending small-cap stocks for Wednesday, 20 October 2021:

Saboo Sodium Chloro – The company has announced that its hospitality division is commencing development on a new property in Rajasthan. The company’s existing company property situated near Sambhar Lake, Rajasthan will be converted into a luxury short-stay accommodation. This is in line with successful strategies in North America and Europe where freestanding properties available for short-term rentals have found above-market rates and high occupancy levels.

The property currently features a swimming pool, tennis courts, sauna/spa facilities and multiple bedroom accommodations. In addition, the property is situated scenically amongst expansive acres of environment-conscious lawns and gardening. The new property will be developed fully out of internal accruals and no additional debt will be taken by the company for the project.

The Sambhar Resort and Salt Spa will be operational starting FY23. The project is expected to significantly add to both the top and bottom line of the company’s hospitality division.

Rane Brake Lining – The company has reported Q2FY22 results. Total revenue was Rs 126.2 crore as compared to Rs 107.7 crore in the Q2FY21 (an increase of 17.2%). EBITDA for Q2FY22 stood at Rs 14.1 crore relative to Rs 22.6 crore during Q2FY21. Net profit decreased by 53.1% from Rs 11.5 crore in Q2FY21 to Rs 5.4 crore in Q2FY22.

52-week High Stocks - The following small-cap stocks have made fresh 52-week high today – Pansari Developers, Sangam (India), Nahar Spinning Mills, Proseed India, Trident, Mastek, Sasken Technologies, Tata Communications and California Software Company. Keep a close eye on these counters on Wednesday, 20 October 2021.

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Hindustan Unilever Q2 earnings meet estimates but margin shrinks

by 5paisa Research Team 19/10/2021

Hindustan Unilever Ltd said Tuesday net profit for the second quarter of this fiscal year rose 8.86% from a year earlier as it increased prices of some products to offset a rise in input costs and controlled expenses.

Standalone net profit increased to Rs 2,187 crore for the quarter ended September 2021 from Rs 2,009 crore in the same period last year, India’s biggest fast-moving consumer goods company said. Profit grew 6.11% from the first quarter.

Operating revenue for the second quarter rose 11% to Rs 12,516 crore from Rs 11,276 crore a year earlier. On a quarter-on-quarter basis, the rise was a muted 6.7%. Total expenses grew 11.6% to Rs 9,883 crore.

HUL’s results matched analysts’ estimates of a 10-15% rise in revenue and 8-10% increase in net profit.

The company said its focused actions on net revenue management and savings enabled it to manage inflationary pressures and deliver a healthy bottom-line performance.

The markets were perhaps expecting a sharper spike in the top-line and bottom-line numbers, as the country’s economy has opened up and is looking to go full throttle ahead. But their disappointment showed in the company’s counter falling 2.67% to close the day at Rs 2,583 per share on the BSE. 

HUL Q2 other key details:

1) Revenue from the home care segment grew 15%, helped by price hikes to offset rising input costs.

2) Sales from the beauty and personal care segment rose 10%, thanks to price hikes and as mobility improved.

3) Revenue from the food segment increased 7% with health drinks volumes growing in double-digits.

4) EBITDA margins shrank by 40 basis points to 25%. EBITDA came in at Rs 3,132 crore versus Rs 2,869 crore.

5) The company declared an interim dividend of Rs 15 per share. 

Management Commentary:

Sanjiv Mehta, chairman and managing Director at HUL, said trading conditions improved sequentially in the September quarter but remained challenging with “unprecedented” levels of input cost inflation and “subdued” consumer sentiment.

“In this backdrop, we have delivered a strong performance growing top line in double digits and stepping up profitability sequentially,” he said.

Mehta said large parts of HUL’s business continue to gain market share. Calibrated price increases and a “laser sharp” focus on savings helped the company protect its business model, he said.

“Looking forward, we remain cautiously optimistic about demand recovery. In these times of uncertainty and unprecedented input cost inflation, we continue to firmly focus in delivering consistent, competitive, profitable and responsible growth,” he added.

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Top swing trading ideas you should not miss.

Top swing trading ideas you should not miss.
by 5paisa Research Team 19/10/2021

Best Swing Trading ideas based on price and volume percentage surge. APL Apollo Tubes and Tech Mahindra.

Price and volume are two of the most prominent inputs used by traders across the world while swing trading. When used in isolation, they reveal very little but when used in conjunction, they help us to sort the wheat from the chaff. So, this swing trading system is based on the deadly combination of price and volume percentage surge, which helps us to discover high probability swing-trading candidates.

So, here is the list of stocks that fulfil the criteria of volume and price surge and as a result, they flash in our swing-trading system: 

    

  1. APL Apollo Tubes: The stock gained 2.69% on Tuesday. The stock’s daily range was greater than its 10-day average range. In addition to this, the volume for the day was greater than its previous trading session and in fact, it was above its 10 and 30-day average volume. In the near term, the stock has the potential to touch the levels of Rs 925 and Rs 950 on the upside, while on the downside, the support is seen around levels of Rs 855. 

  1. Tech Mahindra: On a day when the markets witnessed profit booking, the Nifty IT index gained over 2%. Interestingly, all the IT stocks from the Nifty IT index ended in green barring TCS. The stock of Tech Mahindra jumped over 4% and with this, it outperformed the benchmark indices and hit a fresh high. The stock’s daily range was greater than its 10-day average range. In addition to this, the volume for the day was greater than its previous trading session and in fact, was the highest since July 30. With price and volume criteria met, this stock looks ripe for a decent up-move from current levels in the coming days. Swing traders can keep this on the radar for an up-move towards the level of Rs 1600 followed by Rs 1640, while immediate support is seen around Rs 1490.

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Aurionpro signs pact to increase stake in its subsidiary.

Aurionpro signs pact to increase stake in its subsidiary.
by 5paisa Research Team 19/10/2021

This acquisition is pursuant to the right available to the company under the subscription and shareholders’ agreement signed for the acquisition of a 51% stake in 2018.

Global technology solutions leader, Aurionpro has announced the signing of an agreement for the acquisition of a further stake in its subsidiary SC Soft Pte Ltd (SC Soft). The transaction involves the acquisition of a further 29% stake in SC Soft from the existing shareholders, in various tranches up to December 31, 2022. This acquisition is pursuant to the right available to the company under the subscription and shareholders’ agreement signed for the acquisition of a 51% stake in 2018.

The acquisition of a 51% stake in SC Soft and resultant integration has established Aurionpro as an end-to-end supplier in the Automatic Fare Collection (AFC) segment and further acquisition of the stake in SC Soft will strengthen this position with increased synergies and capabilities.

To quote, Sanjay Bali, EVP of Aurionpro Solutions from a filing with the exchange, “SC Soft has a world-class technology which combined with the experience and reach of Aurionpro makes us a formidable player in the rapidly growing smart mobility market worldwide. The string of recent wins, strong pipeline and our deepening partnership with global players will help us grow this business rapidly in time to come and our decision to increase our holding in SC Soft signals our deeper commitment to this business.”

The company had announced last month that it had signed two strategic deals in their data centre business. It won two separate orders for setting up and designing of the data centres for two marquee names in the Indian market.

Aurionpro Solutions is a global technology solutions leader that helps enterprises accelerate their digital innovation, securely and efficiently. It combines core domain expertise, thought leadership in innovation, security and leverages industry-leading IP to deliver tangible business results for global corporations. Employing more than 1,200 domain and technology experts across North America, Asia and Europe, Aurionpro caters to a host of clients across the BFSI, telecom and logistics industry.

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