I think auto sector rally is taking a well deserved brief pause. Most of the stronger stocks have had a strong rally and post that some pause is expected and is in fact good for the health of the rally. But most of the low hanging fruits have been plucked and hence anyone wanting to join the party now needs to have one foot closer to the exit door. Idea should be to continue to monitor monthly sales figures and see how momentum is going, and take an appropriate call.
Eicher motors has corrected from highs of 3800 to current levels of 3200-3300 which in percentage terms is just 20% correction from peak. It is close to previous all time high of 3350 and retesting the 200 dema. So overall looks a good risk reward equation.
In cyclicals and turnarounds and smaller companies, maximum money is made when subtle changes in business models or business environment are picked up as early as possible. This will often entail some amount of heartache when you see your stocks languishing while other more fancied stocks keep going up. But once a strong trend sets in, returns are often good. For technical analysis guys, it should be an attempt to catch early stage bottoming formations like early stage rounding bottom, or double/triple bottoms or some appropriate candle stick patterns on weekly or monthly charts, or such reversal patterns.
You can have a look at IT sector stocks wherein a lot of stocks are coming out of double bottom or some other bullish reversal patterns. This happening after stocks nearly corrected 50 to 61.8% of their earlier retracements. Fundamentally too it should be easy to do some basic research on these stocks as most of them give detailed presentations, do concalls etc…
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