Month: November 2020

This is archived post of Quess Corp which we did for BNP Pro members at October end. This is just to share how we thought about the idea and how it is working out. This is not a call on stock at current prices. Stock is already up by 18% from below 400 to 470+.

Update – Stock made highs of 725. Up from 400 to 725 in last 3 months. 80%+. If you want to learn and earn – Join here.

Here is a nice looking chart of Quess. A company owned by Billionaire Prem Watsa of Fairfax (same guy who has big stake in 5Paisa and other IIFL group companies, FairChem Specialty, CSB Bank etc). 

Fundamentally very sound company. Today results came out which are more than decent. Quess also owns another listed company Allsec which by the way has interesting shareholder C Mackertich in public shareholders list. C Mackertich is same company operated by Ajay Kayan (Ajay Kedia shown in Scam 1992 Web Series) and had many cases against him and recently he got acquitted. A member of bear cartel from kolkata. 

Anyway, as you can see in the chart stock is just trading above dead cat bounce level of 398 made on 29 June. Trading above 50 SMA and 50 SMA is well above 200 SMA. 

As you can see by two pink lines the pattern closely follows the Binet’s formula. Do not get bogged down by the fancy name of Binet, it is just old pattern we refer as snake pattern.

You can see the range of stock price getting squeezed for a month now. Last time it happened for 2.5 months and stock did 380 to 450 in no time. 

Then what is the catch here? 

Catch is yesterday stock broke down badly. Opened at 403.30, made high of 407.95 but low of 364. But good thing is it closed at 403.85. 

So broke down but recovered by end of the day. If it did not break down yesterday it would be much better. 

Very low risk entry it is offering. SL can be 390 on closing basis which does not mean wait for next day to exit. On same day if around 03:25 stock is trading at 390 or below then watch it and exit in last 2 min if it stays below 390. Because next day it might open -5% or -10% who knows given the volatility.

It can work or fail in short time. It is unlikely to test the patience.

Disclaimer: Posts on the platforms of BN are our perspective on the market. These are purely meant for learning purposes. The perspective provided should not be construed as investment advice or solicitation to trade. We may have positions in the stock mentioned. You agree to make no trade relying on the above contained information fully or partly. By using the content, you agree to these T&Cs.

In markets, nothing is guaranteed but over the period you can find some patterns and based on your experience you can see if that is repeated somewhere else. This is what price action about. Finding some patterns and watch them working, pick the abstract idea from there and apply elsewhere and expect it to work in similar fashion.

Today, we are going to talk about two stocks which have some electrical connection.

Stock 1 : Polycab CMP 942 MCap 14000 Cr

Company has been into business of wires and cables traditionally and promoters have a inspiring story of starting with a shop selling cables to have an empire manufacturing and selling it in many countries. But we do not get excited about the wires and cables as such. The story here is company is foraying into fast moving electrical goods (FMEG) which is sticky, high margin, low ticket, essential item, brand pull like fans, switches, lightings, water heaters, coolers, irons etc.

Very minimal debt, growing fast in FMEG space but currently not very high margin but margins are improving. Company is having good ROCE and already business is doing better than pre covid era. So yes things are getting better and now much better.

Let’s see the chart –

Company got listed in Apr 2019 and things were not really great for it technically as you can see in the chart but in Sep 2019 stock gapped up and did some pull back. This gap up took the stock above listing price and it just changed the things for it. Suddenly all those people who have been in loss who bought when it was listed are now in profits and with such a steep jump people do not like to get out early. Result? reduced selling pressure and stock crossing its previous high will invite the traders to build long positions increasing the buying pressure.

What happens when selling pressure reduces and buying pressure increases? That’s right. Stock jumps and start running. You can see from Oct 2019 at 660, stock did 1160 in Feb 2020 and corona sell off took it down. Post corona stock recovered quickly to 780 level but then sold off again to 640 levels from where earlier in Sep 2019 it took off. Once it crossed 780 again since then stock has respected that level and but did not do much either. Sell off in late Sep 2020 and Oct 2020 meant beating down for stock but it has respected 780 level well in both occasions.

Now earnings came out good and stock gapped up, stock well above 200 SMA and 50 SMA is above 200 SMA. As you can see by sky blue horizontal line stock broke out and then took support near 900 area.

And one of our BNP Pro members signaled towards it earlier few days ago –

Stock 2 : Elantas Beck CMP 2438 MCap 1900 Cr

We posted this chart earlier in telegram today to make a case for this –

Stock is doing classic 45° move since 2013 which is a long time although not as much as Asian Paints.

Now let’s zoom in the chart –

As you can see after the corona crash stock has been trading in a tight band of 2090 – 2450. Company came out with great earnings and that is why you see a big green candle a day ago. Problem is that came with not so much volume so stock may end up testing the patience. Also, stock is thinly traded very low volume. In such stocks once things get going there is good run. 50 SMA is above 200 SMA and stock is right on 50 SMA.

Company posted EPS of ₹26.69 vs ₹17.96

Expect the EPS to cross 100 within a year. Specialty chemical company, an MNC.

Focused on electrical insulation and construction industry. A beneficiary of of Atmanirbhar bharat theme if things in electrical appliances/electronic devices will be made more and more in India. No debt. 75% promoters holding. Historically avg PE of 27 in last 10 years.

Stock is making all the right moves technically(there is scope for improvement though) and fundamentally. Stock can be looked at with SL of 2102. Both these stocks have all the traits to be part of core portfolio but that does not stop us from trading into them for quick returns.

Please do your due diligence before acting on anything shared here and consult your financial adviser. Let us know your thoughts on these two ideas in the comment section.

Disclaimer: Posts on the platforms of BN are our perspective on the market. These are purely meant for learning purposes. The perspective provided should not be construed as investment advice or solicitation to trade. We may have positions in the stock mentioned. You agree to make no trade relying on the above contained information fully or partly. By using the content, you agree to these T&Cs.