Best course of action to pursue in choppy markets is to sit aside and wait for markets to get into uptrend. Maybe take a vacation, read books, do anything that keeps you happily occupied.
But if you are a compulsive investor who cannot do the above, it makes sense to figure out which sector/segments of market offer the best chances of making money. In other words, try to figure out which are sectors in market fancy. And try to focus on those sectors and on good companies in those sectors.
Just to give an example in current markets, financials with cheap valuations which are coming out of prolonged period of underperformance and are seeing improving fundamentals are seeing good uptick. Here too some stocks especially some of the PSU banks have gone up a lot, some of them having gone up 3-4 times in last few months. With these kind of run ups, most of the positives are baked into price. There can be the odd situation where results are so good that fundamentally there could be more upsides to price. The other basket is of PSU companies that have been ignored for long. Cap goods and defence seems another basket of interest. So one can go through these type of sectors and try to find out good trade set ups based on techno funda parameters.
And even in choppy markets, some decent results are well rewarded by markets. Mainly because there could have been a positive surprise within those results. So personally I try to find out situations where there is price -performance disparity and try to play those.
Case in point being the results of PNB HF today. Stock price after hitting levels of 600 had retraced to levels of 530 and today after results there was a good upmove to reach levels of 560 with good volumes. It gave a good candlestick close (wherein body of candle covered bearish bodies of past 3 candles) today with good volumes. My guess is once markets stabilise and resume uptrend, these type of stocks should outperform. The recent correction from high of 600 to below 530 could have been a routine correction or a shakeout, whatever we want to call it.
So idea should be to find trade set ups where chart pattern is good and results are expected to be good. Question is how to find out if results are expected to be good. One way here was to follow the housing finance segmental results of companies that have reported results till date. Other is to listen to last couple of concalls and go through presentations and manangement articulation in annual report etc. In PNB HF all the above things were possible. In GIC HF, management does not conduct concall so its more a leap of faith.
@mehul75 I don’t have any idea about Mold tech tech.
@srikanthg I don’t track Bajaj finance.
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