Uncategorized | Portfolio Yoga

Stock of the Day – Gujarat Fluorochemicals

While the Indices are hitting new all time highs, a lot many stocks are still waking up just now. Gujarat Fluoro is one of those companies that haven’t delivered any strong returns over the years. As on date, the stock trades at 320, a price which the stock first saw in early 2006 (that is 8 years of non performance if one ignores the upside we saw in 2011 and the downside we saw in 2009.

The stock after making the high in 2011 lost nearly 65% before it started bouncing back once again. With today’s move, it has crossed one hurdle in terms of a major resistance though a lot needs to be done before the stock can claim to be out of the woods. Of course, its not that the stock alone has been a under-performer. If we look at its peers, there is not much to choose from and this suggests that unless there is a turnaround in the industry itself, the risk of the stock being beaten back remains high.

Is PVR entering a Bear Market

The biggest problem with stocks is that when they fall, they fall big and quick. By the time a investor realizes that a stock is starting to weaken, it would have lost quite a huge chunk putting a question as to whether the investor should hold the stock with the hope that the stock will soon climb back to the old levels or cut the loss before it becomes too big to cut.

PVR has had a golden run since 2011 appreciating by 116% in 2012 and by 131.4% in 2013. 2014 though seems to have started off badly as it has in these three months lost 25% from the closing price of 2013.

A stock / Index is said to have entered a bear market when either of the 2 conditions are fulfilled

1. The stock loses 20% from its peak.

In case of PVR, we are down way below the 20% mark & hence that condition is fulfilled

2. The stock closes below the 200 day EMA / SMA.

In case of PVR, the stock today closed just below the 200 day SMA level (it broke through the 200 day EMA yesterday).

Technically, the stock is hence already in bear territory. The final confirmation for me would be a close below 470 which is a good support level. If that gets broken, we can see a possibility of a test of 375 – 380 pretty soon (of course, like anything, there is no guarantee and this is more of a probability based on the evidence at hand).

Stock of the Day – J K Tyres

Tyre stocks have been on a roll in recent months with even Apollo Tyres which was crushed on back of its proposal to buy Cooper Tyres having doubled once it was seen that the deal had no way to go but out. As can be seen in the Relative Strength chart below, the best performance in the last 6 months has been CEAT which has beaten the returns of other peers by a pretty wide margin. J K Tyres has not done too badly either and has been the third best performing stock (among its peers) in the last 6 months.

The chart of the stock is showing pretty strong trend though it failing today at the resistance level of 180 does mean that we may either see a small reaction before the longer term trend emerges or this may be the end for now. The pattern we are seeing in the stock is a Cup pattern. If the stock reacts a bit before breaking out, that would be a good sign of the trend having not yet exhausted. But on the other hand, if the stock starts to strongly react from here, it may be a while before we see a breakout above these levels (in recent times, I remember Mindtree which too reacted exactly at the rim of the cup and is as we speak down 21.50%).

Distribution of Stock Prices across Exchanges

BSE being a pretty older exchange (in fact, its the oldest exchange in whole of Asia) has the distinction of having the highest number of listed securities compared to NSE. But as we all know, Quantity doesn’t have to mean Quality.

On most days, we see around 3000 stocks getting traded on BSE vs 1300 on NSE. The average price of a BSE ticker comes to around 160 vs. 260 on NSE.

Below here is a distribution pattern of the % of tickers that are priced at specific prices (do note that since all stocks do not trade on all days, there is a number of stocks that would miss depending on the date of test).

I am always suspicious of penny stocks. Its hence interesting to see that BSE dominates the number of stocks which trade below 25 and above 25, NSE seems to rule the roost. A lot of stocks are listed both on NSE and BSE and hence there will be a significant overlap.

Stock of the Day – VIP Industries

In 2008, VIP Industries made a high of 35.75 and in 2011, we saw the stock making a high of 205. Very few stocks can claim to have such a level of out-performance from the highs of 2008. From late 2011 though, the stock started to under-perform on a massive scale and at one point of time nearly came towards testing the high of 2008.

The stock finally bottomed out in August 2013 at around 40 level and since then has been making a series of higher highs and higher lows. Today, the stock just blew past as it shot up by 18%. This move has come with massive volumes. The volumes not being seen as a Bulk Buy / Sell lends credence to the feeling that today’s move heralds the entry of some strong hands.

While there is a series of obstacles (read Resistances) to overcome, the trend on the medium term has surely turned bullish.

Investing By Day of the Month

Idea borrowed from here

While the original post was done on Dow, I have done the same on Sensex. Number of data points is 7606 since the history of BSE Sensex is much smaller than Dow which has been in existence for more than a Century.

Here is the result,

Here is how it looks if plotted on daily basis

and here is the aggregate performance

PostScript: Changed the Average Monthly Performance Chart since previous one used wrong data 🙁

Stock of the Day – eClerx Services

Based on sales, eClerx is one of the larger listed KPO companies in the Indian Market and hence not entirely comparable with the rest of the IT matrix. But the stock performance has been anything but one of a leader. The stock has since its listing in December 2007 has actually delivered better returns than market leader Infosys and this out performance is by a wide margin (223% return for eClerx vs 85% for Infy).

The stock had a stupendous 2009 and followed it with a good 2010 as well but then delivered flat returns in 2011 and 2012. It broke through the range in late 2012 and has steadily climbed higher. With IT stocks taking a beating recently, this stock too has come under some bit of pressure though the charts are still strongly bullish.

The best entry point for the stock would be if the stock bounces back from the 200 day EMA which currently hovers at 1011. In case that is broken with volumes, we will need to watch the stock as it goes back to its breakout zone of 880 where we should see some strong buying coming in.

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