I think in stocks where there has been very sharp run up in response to good results for a quarter or two, or in anticipation of good results, we have to be very careful while buying at very high levels. Because at elevated prices, expectations are also elevated and most of the times whatever the company delivers falls short of market expectations.
Coming to specific example of Rajratan, it had a dream run from levels of around 540 in June 2022 to 1400 in Sep 2022 and at levels of 1400 valuations (considering TTM EPS of around 25) was very expensive. The rally itself was almost vertical and smacked of a parabolic move. These kind of moves are difficult to sustain after a point and sharp cuts are usually inevitable. Currently stock price is trying to find support at its 200 dema and at 61.8% retracement of its previous rally. Need to watch out how things pan out.
Many a times, its difficult to anticipate impending sharp cuts just by following charts. Unexpectedly below par results will result in sharp cuts, and even technical guys are often caught unawares, and stop losses are triggered in the blink of an eye. In such situations, one has to take swift action and exit, or if company is good and future is bright, bear temporary pain and stay invested.
I used to follow Apcotex, and the market reaction post results has been a surprise for me too. It has gone well below its crucial support of 525 and its 200 dema at 515. Its a good company with very good promoters, but business is slightly prone to vagaries of raw material price fluctuations and hence one cannot think too much long term in such kinds of businesses.
I don’t follow RHIM.
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