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Superstar Stocks: BTST Trading and stocks that could deliver good returns till October 8, 2021.

Superstar Stocks: BTST Trading and stocks that could deliver good returns till October 8, 2021.
by 5paisa Research Team 07/10/2021

Stocks that are in focus, Stocks to buy for tomorrow, Superstar Stocks selected on basis of a three-factor model, United Spirits, Wockhardt, Persistent Systems.

Many times market participants see a stock opening with a gap-up and wish they should have bought this superstar stock a day before to take advantage of the gap-up move. To fulfil this wish, we have come out with a unique system, which would help us to get the list of candidates that can be probable superstar stocks for tomorrow.  

The superstar stocks for tomorrow selected are based on a three-factor prudent model. The first important factor for this model is price, the second key factor is pattern, and last but not least is the combination of momentum with volume. If a stock passes all these filters it would flash in our system and as a result, it will help traders to spot the superstar stocks for tomorrow at the right time! 

Here are the superstar BTST stocks for October 8, 2021.

United Spirits (Mcdowell-N): The stock has registered a fresh all-time high on Thursday as it has jumped 4%. The stock formed a bullish candle and it is seen near the day’s high. Interestingly, almost two hours are remaining in Thursday’s session and the stock has already surpassed the volume of its previous trading session. The RSI on an hourly basis is in the bullish territory, while on the daily and weekly time frame it is in super bullish territory. The stock can probably test levels of Rs 932 followed by Rs 945 on the upside, while on the downside, support is seen around Rs 884.

Wockhardt: The stock has jumped nearly 5% on Thursday and moreover, the most striking point for this stock is that the stock has seen a huge spurt in the volumes. The daily volume so far has already surpassed its previous day volume and it is the highest since September 27. The volume activity is seen picking up in the last one hour or so. The 14-period RSI is in the bullish territory on hourly and daily time frame. The stock has the potential to test levels of Rs 499 followed by Rs 508 on the upside. On the downside, the level of Rs 450 is likely to act as immediate support for the stock.

Persistent Systems: The stock is on verge of a breakout of horizontal trendline. The stock has already surpassed the volume of its previous trading session. The RSI is in the bullish territory on the hourly, daily and weekly time frame. The stock has the potential to test levels of Rs 3880 and immediate support for the stock is placed at Rs 3730.

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Here is why IPO price bands have attracted SEBI’s attention

by 5paisa Research Team 07/10/2021

Earlier this week, the Securities and Exchange Board of India floated a consultation paper wherein it proposed a few changes to how initial public offerings (IPOs) are priced in the country.

The capital markets regulator said that it proposes to fix a minimum price band for IPOs. It said its primary market advisory committee has recommended that a minimum price band in case of all public issues through the book-building process may be 5%. Essentially, this means that the upper price of the range should be at least 5% more than the floor price.

“The objective of fair and transparent price discovery mechanism in a book-built issue appears to have been diluted over time due to evolving market practices,” SEBI said in the consultation paper.

The regulator has sought comments if there is a need for a minimum price band in IPO and, if so, what should it be.

So, what prompted SEBI to come out with these proposals?

The SEBI proposals come at the time when India’s capital markets are seeing a boom in IPOs. A large number of companies have already floated IPOs and several dozen companies are planning to do.

However, in this euphoria, what has gone unnoticed is how ‘book building’ issues are losing their character.

Book building is basically a process used in IPOs for efficient price discovery. It is a mechanism where, during the period for which the IPO is open, bids are collected from investors at various prices and then determine the price at which the company actually sells the shares.

The book-building IPOs are different from fixed-price issues where shares are offered at a single price. Most IPOs are book-built issues.

Over time, the price band – the range of price at which investors can bid during the IPO to make it a truly price discovery mechanism – has got muddled.

A decade ago, book-built issues had a difference of 8-10% on average between the upper and lower ends of the price band. That difference has narrowed to less than 2% over the last few years.

In 2011, for instance, this difference was 9.8% among the 36 book-built IPOs. This touched a high of 10% two years later. Since then, the price band has been narrowing. In 2021, the 36 book-built issues so far had a difference of 1.5% in the upper and low ends of the price band.

This is what prompted SEBI to come out with the consultation paper. “A narrow price band presents an opportunity to an issuer company to camouflage a fixed-price issue as book-built issue,” the regulator said.

As a result, companies can circumvent the conditions and regulations attached to the fixed-price method, especially related to the allocation methodology, it added.

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These top holdings of Madhu Kela outperformed BSE Sensex in the first half of 2021.

These top holdings of Madhu Kela outperformed BSE Sensex in the first half of 2021.
by 5paisa Research Team 07/10/2021

While BSE Sensex was 10% up till June 2021 quarter, the portfolio of stocks held by Madusudhan Kela outperformed Sensex with an astronomical return of 124% from one IT company.

2021 Outperformers till June quarter:

  • Madhu Kela had a stake of 5.58% in this micro-cap company IRIS business service on Jun 30, 2021, worth Rs 11.5 crore. The stock has surged from Rs 38 to Rs 86 in a very short time. In six months the stock registered a return of 124%. 

  • The second outperformer is Radico Khaitan Limited, he had a stake below 1% in this mid-cap liquor company. The stock has surged from Rs 456 to Rs 780 in the first half of 2021. In six months it registered a return of 70%.

  • Third outperformer is SMS Pharmaceuticals Ltd. Madhu Kela had a stake of 1.10% in this mico cap pharma company worth Rs 14.3 crore. The stock has surged from Rs 118 to Rs 180 and registered a return of 45% in a similar time horizon.

Investment strategy of Madhu Kela

Theme Identification:

Identify big growth themes and special situations for both tactical and long-term investments.  

Bottom-up Construct:

Within the identified theme, they filter out companies with better risk-adjusted return characteristics. They use a combination of proprietary sector models, earnings/balance sheet analysis tools, risk assessment frameworks to further narrow the field for investment.  

Quality of Management:

This forms the bedrock of their investing philosophy. They look out for entrepreneurs with passion and a hunger to win. The individual must demonstrate both vision and execution capabilities.

Quality of Business:

There should be a runway for sustainable growth, capital allocation decisions, investment into IP, comparison of key operating metrics against industry benchmarks, scalability potential and right to win incremental market share/business etc, are some of the points they look out for.

These are some of the steps behind Madhu Kela's stock screening process. They are size agnostic and generally prefer concentrated, medium-term bets (2-4 years).

Madhusudan Kela (Madhu), the founder of Invexa Capital, is one of the most eminent and seasoned investors in the Indian Capital Markets. In a long and highly successful career spanning three decades, Madhu has received several prestigious accolades for his investing acumen - including the Best Equity Fund Manager from the Prime Minister of India.

When you pick a stock do you prefer using any of Madhu Kela's strategies?

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What does the relative price strength predict about HDFC Bank share price?.

What does the relative price strength predict about HDFC Bank share price?.
by 5paisa Research Team 07/10/2021

Last five-year data shows that once this ratio starts increasing, it can go as high as two standard deviations above its average before reverting back towards its five-year average.

Most technical analysts employ various types of screening methods to identify the winners. One of the most widely used is a concept called relative strength to judge which securities have the promise. Relative price strength is a reliable concept and has been widely used to find the strength of stocks. One of the most common means of establishing relative strength is called the ratio method. It is merely the ratio between stocks and their index.

It has been witnessed that this ratio of well-established companies keeps on moving around the average. Divergence analysis, trend lines, and even patterns appear in the ratio lines. For example, in the last five years, the average ratio for HDFC Bank has been around 0.0942. A rising ratio shows the strength of the stock. The ratio of HDFC Bank to Nifty 50 after reaching a high of 0.11 on November 10, 2020, saw a steady decline. It reached its recent minimum of 0.085 in September. Now again it is showing a consistent gain and now it is at 0.091, which is below its five year average of 0.0942.

Last five year data shows that once this ratio starts increasing, it can go as high as two standard deviations above its average before reverting towards its five-year average.

Besides, there are fundamental reasons that can help the bank to continue its momentum. For example, on October 6, Moody's has affirmed the long-term local and foreign currency deposit ratings of HDFC Bank, at Baa3. At the same time, their rating outlooks have been changed to stable from negative. The bank also plans to unlock value through the listing of its non-banking subsidiary, HDB Financial Services. The bank is eying a valuation of anywhere between Rs 60,000-67,500 crore in which Bank holds more than 90%.

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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 07/10/2021

MCX, Kalyan Jewellers, Blue Dart has witnessed volume burst in the last 75-minutes of 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.  

Multi Commodity Exchange of India (MCX): The stock of MCX jumped over 8% and it has closed at a fresh 52-week high on Thursday. The most striking fact is that the stock has witnessed a majority of the volume activity in the last 75-minutes of the trading session. Total traded volume for the session was nearly 22.53 lakh and 70% of the volume activity was seen in the last 75-minutes of trading. Furthermore, the price too witnessed a sharp spike in the last 75-minutes, which indicates that there was a lot of interest seen in the stock. Hence, market participants can keep a close on this stock.

Kalyan Jewellers India: The stock had gained nearly 14% on Thursday and interestingly, one-third of the volume for the day was recorded in the last 75-minutes of the trading session. Plus, the price of the stock also shot up and closed near its day’s high. Keep a watch on this stock.

Blue Dart: The stock moved in a lacklustre manner for the majority part of the trading session on Thursday. However, in the last leg of the trade, the stock had witnessed buying interest. This is quite evident from the fact that nearly 70% of the volume of the day was registered in the last 75-minutes of the trade. Along with this, the price also surged higher, which suggest that the stock could remain in action in the coming trading session. Don’t miss out on this stock.

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These stocks are likely to be in focus on October 8.

These stocks are likely to be in focus on October 8.
by 5paisa Research Team 07/10/2021

Indian equity benchmarks traded on neutral lines on Thursday. Both Sensex and Nifty held the gains from the start of the trading session. Sensex ended 482.20 points or 0.82% higher and Nifty gained 142.10 points or 0.82%.

In the broader market, the BSE midcap and smallcap indices settled in green with gains of 1.68% and 1.38%, respectively. The domestic sentiments were dampened by the negative cues from other Asian markets.

On the sectoral front, all the indices ended on the higher side except BSE Telecom and BSE Oil & Gas. BSE Realty, BSE Consumer Durables and BSE Auto have rallied up to 6.03%.

Keep a watch on these stocks on Friday:

Infosys- The company announced its partnership with ATP Tour to launch a suite of exciting match stats and analysis tools designed to bring fans, coaches and media closer to the action of men’s professional tennis. The new features launched today have been enabled using the Infosys Tennis Platform which leverages tech such as big data analytics and natural language generation (NLG) to produce match insights in 3D.

Piramal Enterprises – The stock has made a fresh 52-week high price of Rs 3014.95 in Thursday’s trading session. The board of directors of Piramal Enterprises at their meeting held on October 7, 2021, approved the demerger of pharma operations. Piramal Pharma will be listed on BSE and NSE. For one share held in the company, four shares of Piramal Pharma will be issued.

Mahindra & Mahindra - The company shared that on Thursday, Mahindra XUV700 clocked 25,000 bookings in 57 minutes of its commencement which is an unprecedented milestone in the Indian automotive industry. The volume of 25,000 XUV700s made available today at the launch prices reflects up to six months of production depending on the variant. With this, XUV700 qualifies to be the first four-wheeler in India to hit this milestone.

52-week high stocks – Sensex rallied up to 500 points in Thursday’s trading session. Among the index, stocks of Oil & Natural Gas Corporation and Titan made new 52-week high prices.

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