Some Green Power For Portfolio

Nobody knows what might happen tomorrow in the market. If anybody has sold you something which predicts what will happen tomorrow then you have been duped. Market being probabilistic game thus nobody being able to predict what might happen next is what makes it interesting. And it is going to remain this way for long time to come despite the algos, quant and evolving trading strategies.

Figuring out what stock to buy is the easiest part of the game in the financial market. Being disciplined so that if a lot of things start to go against you will save you from risk of wipe out.

More than the stock picking it is how you trade that counts. At what level you have bought, how much you have bought and what is the red line to say I have been wrong on this trade. These questions are quantitative in nature and can be answered by you after you have put in hours to understand how market works or by someone like us who do this day in and day out. What you do next after you have a stock with level to buy and SL to exit will decide whether you make money or not.

Trading is a hard game. Few months of one way trend may make you believe it is easy and you are master now but take it from us, even after spending years it is a hard skill to practice with discipline. From time to time market will take away money from your portfolio and if you are new to this game it will take away much more than what it has given. You still have to stand up saving your mental faculties from getting fried and some capital to rise again.

Now that behavioural pravachan on tradings are over, let’s talk about few stocks and how they are looking.

Adani Green. CMP 1196. MCap 1,87,000 Cr

This is one stock where each time we looked at it we wondered how much more it can rally. Generally when you get such question you should know stock will rally more and more leaving you high and dry. It has happened with us in many stocks such as Dixon, Hindustan Foods and many others.

This time we decided to take a monetary stand here and see how it goes.

Adani Green is into renewable energy space in India.

Let’s see what the chart says –

Point 1 is Corona High around 220 and point 2 is where stock found support in corona sell off near 120. Actually high before corona is near 235 in Jan 2020 but not visible in this chart. So as per what we do we just had to wait for stock to cross 235 and buy it. Stock did that near point 3 where it crossed corona top and pulled back and then peaked around 480 at point 4.

After that stock went to consolidation mode before breaking out of that 480 range at point 5. In last one year we have traded Adani Gas (foolish enough to sell at 108 after buying at at 99), Adani Power, Adani Ent and Adani Green also. Adani Gas we sold due to stock not making move. Adani Power hit SL of 8%. In Adani Ent and Adani Green exited with minor single digit profits.

Adani Green trade was particularly scary and we could not hold onto it back in July 2020. This time we think we have got the strategy to trade this one.

You can see stock crossed the previous high of 480 and then made highs of 1221 with big volume. At that point we thought now it is done deal and rally over. But over next few weeks after Nov 2020 stock made a base near 900 to 1000 and now is knocking at the door of previous ATH.

Strategy – Take risk of 1% of your total capital in the trade. So if you have 10 lakh worth portfolio then risk ₹10,000. Assume ₹100 per share risk (difference between your buy price and SL) then you can buy 100 shares. Now with rise of 20% or more depending upon your risk appetite and how you respond to risky situation emotionally start trimming it, and then some at 30% and so on.

Idea is to take your original money out of it and then ride the profits without worrying. It should not surprise you if stock can double even from here but since nobody knows for sure and stock is at such elevated levels prudent to exit enough to get back our money and ride only profits.

Stock looks good near 1200 with SL of 1109. Not every trade we discuss you have to take. Do only what suits you.

Adani Power. CMP 55. MCap 21400 Cr.

An old economy business with burgeoning debt making huge losses. Nothing more could go wrong. But pattern is attractive so we will dive into chart straight away –

Ah, so it is snake pattern. Great. Now what else you can see? Yes, stock is trading near 50 SMA. Do not worry about too many lines on the charts all of them are just MAs for varying time frame.

Another good thing is stock is just shy of corona top of 65 area.

Snake pattern, stock near 50 SMA, about to cross corona top and has tiny float of 1500 Cr with Adani name. Nothing could make it better than this.

Stock looking good near 55 but as close to 50 better it will be. Mostly add in range of 52-55. SL of closing below 49.

Hope this (Adani) Green (Adani) Power combo can make things fiery for portfolio on upside.

As always, do your DD, not every trade you have to take. Every trade is an experiment. We learn some lessons in every trade to make things better in the future.

What do you think about these two ideas, as you all must be having some or the other thoughts about these stocks.

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.