PFC had a major resistance at around 165-170, from where it fell twice In June 2014 and April 2017 and another higher even older resistance at around 192 in Oct 2010. Once these resistances were crossed, stock price went into a major upmove and currently has reached levels of around 270. When major multiple year highs are crossed, and favorable factors like cheap valuations, business tailwinds etc are present, these are the types of moves seen. That is why we have a whole 52 weeks high and all time highs thread.
@ChaitanyaC The probable answer to your question is that earlier PFC was considered only as a dividend play with questionable financials and people were worried about the NPAs piling up in their loan book. But once reforms related to power sector came into play, and investor sentiment towards power sector changed, the perception towards PFC , REC etc also changed and investors were less worried about NPAs.
Regarding your point about investors not paying a price beyond a certain point, there are different investors who think differently. Some pure momentum traders buy only based on momentum and for them crossing all time highs is more than enough reason to get into the stock. Then there are quant guys who join the party once they find out momentum in their quant systems.
It’s often difficult to find out a reason for moves in a stock, atleast initially and many a times (more so these days with news leaking quickly through various mediums) the real reason for moves in stock price comes out much later.
There is a whole group of investors who track details of specific sectors they specialise in, with access to export data, scuttlebutt, raw material prices, finished product prices, shortages of products and other similar things. These investors get into companies much before any decent quarterly numbers or company specific news come about, because they have the information edge and they know how to analyse that information in terms of its impact on company’s fundamentals.
The investment landscape has changed ( in parts) due to information edge, analytical edge, scuttlebutt edge, of some group of investors. Trying to find out reasons for each and every top and bottom is beyond my understanding and neither do I try to figure those out. If I do not have these skill sets, then price becomes my guide and I can follow these guys even if it is at a slightly higher price. And that’s where technical analysis comes in. Technical analysts do not have to worry about what investor is thinking at the top or bottom, he is only guided by price and volume action.
We are currently going through a sectoral bull run in PSUs which started in defence and railway stocks, and now is followed by other PSU companies, and PSU banks. How long this kind of fancy lasts is anybody’s guess. But if one is able to catch these sectoral rallies, a lot of money can be made in quick time.
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