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Market is a living being and like all living beings it wants to be understood. To be understood it has to be able to communicate. Market, sadly, cannot call you or message you. How does then market speak to you? It does. It does through PRICE. The only signal with market to communicate with others is Price. That is why it is the pivotal piece of market activities.

Polyplex Corporation MCap ₹3750Cr. CMP ₹1195 Tradable Float MCap ₹1456 Cr

Polyplex Corporation is a multinational company headquartered in India, primarily manufacturing biaxially oriented polyester (BOPET) and other plastic films like BOPP, CPP, and Blown PP/PE. They focus on packaging, electrical, and industrial applications, with operations in countries like India, Thailand, Turkey, the USA, and Indonesia, serving over 2600 customers in more than 85 countries.

ROCE went from -1% in FY14 to 20% in FY22. Now back to 2% in FY24. Despite such wild return ratios Operating cashflows has not gone negative in last 10 years. On 3049 cr fixed assets they are having 791 cr current work in progress also known as capex with reserves at highest ever and debt lower than FY22 in Sep’24.

EBITDA margins/OPM in screener went from 3% to 20-25% and in Sep’23 it was again 3% while in recently declared Sep’24 it has risen to 11% with 11% growth in sales leading to big 242% jump in PAT/EPS.

It should be obvious with these jumping up and down margins and return ratios that business is cyclical with commodity nature where the seller does not have much pricing power. In such business, all you can do is to not make the balance sheet bad enough that you do not survive the down cycle. That is for promoter. You as investor would like to enter when things look bleak from sales, margin, profit and return ratios perspective where stock has been beaten for months, and no one is looking at it. But you can hold such business forever hence you would want to sell out when how this commodity business has changed and this time it is different tune is sung by everyone with upbeat margins and rising sales leading to big jump in return ratios and stock trading at new all time highs. This is true for Polyplex and its peers such as Cosmo First, Jindal Poly and so on.

Surprisingly, it peaked in April 2022 at 17 PE at 2870 per share while currently at 1195 with another 140% up move required to reach there it is at 24 PE. Lesson is do not get fooled by current earnings and rather think 12-18 months out. Cyclical/commodities are bought when they look expensive (optically) and are sold when they look cheap (optically). Every time they look cheap a downturn in business is coming. Every time they look expensive an upturn in business is coming.

In such business for valuations, you should look for sales multiple and book multiple. This one trades at 1x book and 0.57x sales while at peak in April 2022 it was at 2.8x book and 1.4x sales. A man with the hammer sees everything as nail to be hit. But that is not the mistake of the hammer. It is lifeless tool and act as you a living being want. Do not use wrong tool and scream that this tool is scam and does not work. Debt to equity here is at 0.24 which is very manageable for them.

If you study this sector, then Cosmo First and Polyplex look better.

You can see stock did exceedingly well after Covid lows with multiyear breakout making 4.5x from breakout levels in July 2020 before peaking in April 2022 at 2870. Since April 2022 it has corrected by 73% to 761 by March 2024 and now started to bounce.

You can see in weekly stock went below GL in August 2022 with NOUS red at 2150 and saw big sell off till 761. In between it bounced but NOUS remained red while GL acted as resistance for it.
First time since April 2022 peak it has crossed GL in Jun 2024 and made swing high of 1375 in Aug 2024 and then went into small consolidation. Also, notice the slope of GL is now upwards.

Daily has NOUS green with a green dot signalling massive build-up of smart money in stock positioning for outperformance. NOUS is green in daily and weekly while red in monthly giving it 3/6 score. RSS is at 54 which should improve over the weeks rapidly. Around 1170 it looks good and then pyramid above 1270 and 1375. Three tranches to think. You can play around this as per your style we are sharing as per our understanding.

Kirloskar Brothers MCap ₹16192Cr. CMP ₹2039 Tradable Float MCap ₹3045Cr

Kirloskar Brothers Ltd (KBL) is a leading fluid management solutions provider, primarily known for manufacturing pumps, valves, and hydro turbines. Based in India, KBL has a significant presence globally with operations in countries like the UK, USA, and Thailand. They serve a variety of sectors including water supply, power, agriculture, and industrial applications, focusing on engineering excellence and sustainability.

Company has done big deleveraging with lowest debt in last more than 10 years with reserves at highest ever and ROCE above 25%. You ideally want to buy such business when at low margin and return ratios but a technical trade can be taken wherever risk reward is decent with good probability.

https://twitter.com/BhartiyNiveshak/status/1851806766021132784

This for your learning purposes and we will not say a word on monthly.

Weekly is good with NOUS green and stock bouncing from GL.

☑️Bounced from sloping upwards GL
☑️RSS at 92
☑️SBD printed a month ago
☑️Good result posted
☑️Market reacted positively to result

✅30%+ move required to make new ATH

NOUS is 6/6 since green in daily, weekly and monthly.

Signpost India MCap ₹1394Cr CMP ₹261 Tradable Float MCap ₹357Cr

Signpost is a digital marketing company that specializes in providing customer engagement and communication solutions for small and medium-sized businesses. Their services include:

• Automated Marketing: Tools for sending personalized text messages, emails, and voicemails to customers.
• Customer Interaction: Enhancing customer engagement through automated reminders, feedback requests, and promotions.
• Reputation Management: Helping businesses manage online reviews and enhance their digital presence.

Signpost’s platform aims to increase customer loyalty, drive repeat business, and improve overall customer satisfaction, primarily targeting local service businesses like home services, automotive, and health & wellness sectors.

In the context of Signpost:

• Merger with Pressman Advertising: Signpost India, a digital out-of-home (DOOH) and advertising technology company, merged with Pressman Advertising, a traditional advertising agency.
  • Objective: The merger aimed to combine expertise, resources, and client bases to offer a broader range of advertising and promotional services with a strong emphasis on digital and emerging technologies.
  • Outcome: The merged entity focuses on streamlining operations, achieving cost efficiencies, and accelerating business growth.
  • Share Exchange: As per the merger agreement, shareholders of Pressman Advertising received one share of Signpost India for each share they held in Pressman, effectively integrating the shareholder bases.
  • Market Response: The merger was approved by shareholders, and the new entity has embarked on a path to leverage digital advertising capabilities, particularly in the DOOH space, to enhance market presence and service offerings.

This corporate action was intended to create a more robust entity in the advertising sector, capable of competing effectively in both traditional and digital advertising markets.

High sales growth of 53% in Sep 2024 YoY with 167% growth in PAT/EPS.

After merger and listing of Signpost shares it hit few upper circuit only to start the big downmove. High of 466 in March 2024 and low of 212 in Sep 2024.

Stock hit 20% UC on 16 August 2024 printing SVD but then again corrected making a new low. A SBD was printed on 12 Sep and next one on 24 Sep signalling smart money getting in the stock for coming up move. On 14 Nov another SVD showed up while stock was up 16%.

2 SVDs and 2 SBDs after fall of more than 50% signals smart money piling on this stock.

Stock looks good on any dip or here. Pyramid opportunities will come as it crosses GL and then as it crosses the swing high above GL making new high. Shared this name on Friday in Telegram for study.

NOUS you can see is lush green with green dot despite price near bottom only. Since listing history is short no point discussing other time frames such as weekly or monthly.

You can also study CCL Products and Siyaram Silks.

Hope these ideas for your study will help you. Use these ways of thinking to get better understanding and use them in future in other stocks. Focus on structural tendencies of the market and keep succeeding.

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.

When market becomes nervous due to some event or uncertainty then it either sees the whole sale sell off or becomes extremely narrow. Either way it becomes extremely difficult to make money specially in limited time duration. This problem accentuates for those looking for bigger trending moves of 50% or more.

• Shivalik Bimetal. MCap ₹2461Cr. CMP ₹427 Tradable Float MCap ₹812 Cr 

Shivalik Bimetal Controls is a company specialized in the joining of material through various methods such as Diffusion Bonding / Cladding, Electron Beam Welding, Solder Reflow and Resistance Welding. Their present program includes Thermostatic Bimetal, Clad Metal, Spring Rolled stainless Steels, Electron Beam Welded Material with multi- Gauge and Multi- Materials strips and Thermostatic Edge- Welded Strips for a board spectrum of industries.

40% revenue is from India and 35% is from America while Europe accounts for 14% of revenue. They are one of the few Indian players in bimetal and low ohmic resistance shunt market. NYSE listed Vishay is one of their top customers.

For shunts they have largest capacity in the world with market share of 10% while in bimetals they have 16% market share. There is client stickiness because of technical knowhow required in this business. End user industry such as EV, electricity smart meters and electrical goods market are growing fast in India. Despite expansion debt to equity is low at 0.3 while ROCE is 35%. But this is highest ROCE at least in last 10 years so we will have to see whether it sustains, or they fall from here. In last three years they have almost doubled the net block (fixed asset). We have talked about this stock in Deepavali 2021. This is a proxy to EV and smart meter focus of government.

We discussed this on Feb 2, 2023, in Pro and since then it has delivered Dec 2022 results which have good growth YoY but flat QoQ. Since market was expecting even more muted result hence stock corrected a lot, but result surprised the market on upside and hence stock came out of falling trendline in dailies. Since it was near upward trending GL (green line) hence it offered low risk entry.

The stock got listed in NSE only in 2021 and hence used BSE chart. This is classic chart to study and learn price action and how it works in bigger time frame over years.
This is a bigger story that is likely to play out over next 2-3 years, but we still have to look at price action to take optimal decision.

There are many ways to play such stocks also. One is to just buy some and then wait for next base to add more and then keep holding as long as big picture things remain intact. Another way is to trade it for burst move lasting few days to few weeks. No one method is correct and it mostly depends on what suits you.

• Refex Industries. MCap ₹620Cr. CMP ₹281 Tradable Float MCap ₹279 Cr 

They are a specialist manufacturer and re-filler of Refrigerant gases that are replacements for Chloro-fluoro-carbons. They have business of Coal Ash handling and using reverse logistics for it.

Company is posting blockbuster growth of three digits in sales. In Dec’22, they have posted sales of 380 Cr and PAT of 26 Cr. The company used to have issues in the past and still there is a lot of trade receivables. So you should keep this in mind while dealing with this. SL for this you can use 242.

The company has ROCE in 20s while debt to equity is at .45 and they do not pay dividends. They are currently trading very cheap so if stock becomes huge even from here then do not be surprised given the growth and valuations.

• Ujjivan Financial Services. MCap ₹3389Cr. CMP ₹278 Tradable Float MCap ₹1900 Cr 

This is the holding company of Ujjivan Small Finance Bank which is also listed but since risk reward was better in holding company hence shared this instead of SFB directly. ROEs are improving, expect the loan growth of 30% in FY23, asset quality can improve further from here.

The bigger news is reverse merger of SFB with holding company to be done by June 2023. More than 4% RoA while ROE is inching towards 30% while it is trading at 2 price to book. Right before Corona the business used to trade above 4 times book value. Ujjivan is best in SFB peers.

#OnCNBCTV18 | Ittira Davis of #Ujjivan SFB says they expect strong #loan and #deposit growth going forward. Tells @_prashantnair, @latha_venkatesh & @Nigel__DSouza that they expect to stay ahead of the #loan growth guidance of 30%. pic.twitter.com/UPTj0JZ4Eu

— CNBC-TV18 (@CNBCTV18News) January 6, 2023

Main trend has been downward after three months of listing in 2016. May 2016 it got listed and then moved 150%+ in next three months and since they it had hard time. Interestingly if you notice the lows hit in 2022 Feb-March, are even lower than Corona lows of March 2020 for the stock. Stock is still 35% down from pre corona high which is at 415 levels. It may have changed the trend in Feb 2020 if not for Corona.

As you can see with Russia entering Ukraine stock got hammered and then had big volume up move on March 4 but then it just kept falling and only in April 2022 stock started to run. One should not get excited seeing such moves unless you have strong understanding of business and can withstand volatility. Please add BNP indicator in your tradingview and always look for stocks trading above GL and GL sloping upwards. This happened only by July 2022. Stock was still trading at only 140.

You may have stocks that you understand very well and have understanding of business but if you add just simple concept of GL then you can improve your stock market journey tremendously.

Pennar Industries came out with blockbuster earnings and see how beautifully stock is going up from GL with SBDs.

Nava also reported good numbers, but stock could not do much and you can see on charts why. Now either it dips to 230 then one may add or if it goes past trendline above 255 and sustains.

Ganesha Ecosphere reported good numbers but since more capex is yet to come online and stock is way above GL stock has not reacted to it. The story is intact. Neuland Lab and Centum Electronics have hit the SL but since they are the fundamental picks, they are likely to set up again and some of you may have not exited it and it is fine.

Focus and Choice International were two quick trades shared which are lesser known. Madhusudan Kela has 12% stake in Choice International. Both these stocks have been in insane momentum so be quick to take profits if weakness is seen. Axita has been another quick trade that continues to do well.

• Som Distilleries & Breweries. MCap ₹888Cr. CMP ₹120 Tradable Float MCap ₹444 Cr 

They are into the manufacturing and sale of Beer and Indian Made Foreign Liquor (IMFL).

Stock is trading near GL and offering low risk entry. Promoters although have little over then 30% stake only which seems low for Indian stock, but they have been buying relentlessly from open market over last many months. As soon as stock crosses 125 and closes above it on dailies then it will gather pace. More details in this Slack post.

100 Cr capex in Bhopal & Hasan coming on stream in Feb 2023. Q1FY24 can have much better numbers. Market share gains continue across regions.

This is one of the names where growth is there, capex is coming online, market share gains are happening which company updates via exchange filings, promoters just keep buying shares from open market and valuations are not demanding.

Such stocks reward well because they have all the engines firing. As more capex come online sales grows and with scale comes improvement in gross margins and as capacity utilization climbs up operating leverage kicks in and then market not only makes stock run due to profit growth but gives higher earnings multiple too. That is both earnings growth and growth in multiple (rerating) leads to bigger gains.

If it runs 50% in few months unannounced you should not be surprised. This is a big candidate for rerating.

Hotel as a sector continues to report great numbers and Royal Orchid is something we have talked about multiple times. Stocks like ICEMAKE, Axiscades, Zentec, Gravita, Kabra, PGEL, Speciality Restaurant, TWL/JWL/HBL Power/Kernex from railways, in metal space stocks like VSSL etc. continue to be good. There are themes of water treatment and electrical capital goods that are doing well.

Staying away from Adani stocks and not buying seeing the discount will be wise decision. Whenever some stock lands in controversy then market hammers them out of the shape because market is about perception. Even if some buying due to low float can take them back to old levels reward is not good enough to take the stress there.

Chemical as a sector has suffered a lot and may be a quarter of pain more. A lot of stocks will start becoming attractive soon and we are looking at something like Sudarshan Chemical. There is no structural issue in the sector. A lot of healthcare stocks seem to have bottomed out. Even if you consider large cap pharma stocks which have been battered, they should reward well over next few months. Same is true for paint stocks and so on. We are looking at Marksans and Bajaj Healthcare from small cap pharma space.

Hope you are enjoying being part of Pro and all the learnings that market keeps giving us from time to time. If you have any questions, feel free to ask in 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.

Everything works in cycle. There is nothing that works in straight line. Stock market is no different either. If you buy something at the wrong time then despite business being good and management being good you may end up with losses. Now value investors will tell you hold it for long term if everything is great. That is wrong because there is opportunity cost too. While your stock is in red other stocks are making more and more green. You have to cope with that too.

Ultimately there are no prizes for holding great business but only your profits can help you in paying the bills or buying something that you desire. All other things in market howsoever great must result into better returns. The only thing that should matter to you is your CAGR.

Should we share a fresh idea or you already have great ideas?

If you want then RT and Like! Spreading to others is paropkar here!!

— BhartiyNiveshak (@BhartiyNiveshak) April 9, 2021

See that above tweet? Clearly says RT and Like. Many people won’t be doing even that and some would do just like and come in DM asking for stocks. We are not asking for your kidney. If you can not RT and Like then do you really deserve the ideas and will not that be unfair to those who actually RT and Like?

Salzer Electronics. MCap 205 Cr. CMP 128.

Company is into business of manufacturing electrical installation products and components. You can click on the name above to see the product range in detail.

Let’s look at the price action of the stock which is non negotiable for us –

This is weekly chart. As you can see stock is forming a reverse head and shoulders pattern. For quite some time even before corona crash came it was under pressure and trading below 140 level. Corona crash led to stock crashing from 130s to 50s. After that stock has been undoing all that damage and recently in Dec 2020 stock was able to made highs of 153 which is highest since Oct 2018. Clearly market participants are not averse to this stock anymore. But there is no clear likability for the same either as of now. In early March 2021 stock again attempted to break out of that consolidation but it failed but you can see the large volume.

It looks like bullish sentiments are subdued due to selling by Sundaram MF which had during March 2020 5.62% stake which has been consistently reducing and currently is near 2.67%. This selling may keep stock under pressure for sometime or if buyers prevail then seeing the run MF house may exit quickly. Not much downside visible from here thus.

Even though it is barely 200 Cr MCap company the float is large in terms of percentage. That means significant desirability to own the stock must be there for it to move big. If there was same money chasing few shares then move it will likely be bigger.

On normalized basis you can expect it to post the EPS of ₹16-20. Even from valuations perspective there is no outrageous situation.

It is looking good in the range of 120-130 although momentum will come only once stock is able to sustain above 145. It may happen after few weeks to 2-3 months and that is hard to say.

Clear red line below which more pain may ensue is 116 on daily closing basis.

Generally this is how we cover the stock ideas for Pro members. Please do not DM us now about membership since it opens on first two days of each month and only then you can get it. It will open next on 1 May 2021 and will close on 2 May 2021.

Do your DD and run it through your checklist. Let us know what you think about this idea.

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.

There is wisdom in the crowd. Sum of the parts becomes better in such case and beat any individual brilliance. That is the idea behind market. Batters of free market idea, including us, rely on this fundamental concept. If you see the crowd there is everything – utter madness, stupidity, mediocrity, brilliance, godly wisdom. But if you aggregate these vectors then most of the things cancel out leaving the wisdom of the crowd which does not suffer from individual issues. That is why most of the time you are better off trusting market – the price action that you see on screen.

Let’s look at this chart of Dr Reddy – CMP 5229. MCap 87,000 Cr.

7 Point Price Action Story –

1. Stock made top alongside all big pharma names in Indian market .

2. Stock declined and tried to take support and looked like it can bounce from here and many Individual investors make this mistake and get stuck for years, become long term investor. Do not do that. We will take a zoom at this point later.

3. This is where actual bottom was made and bad news is it would be hard for anyone to get this right. But good news you do not have to know the exact top and bottom to make returns which will be great.

4. This is where stock attempted to make the upward move but failed just touching the previous base.

5. Stock went into mode which could benefit. Once stock crossed that Pink line on chart it was well above MAs and 50 SMA above 200 SMA signifying return of momentum. But soon corona came and stock went to as low as 2500 from 3300 – a 25% drop from the peak which is much less than the wider market. This is a sign of what lies ahead. As and when market bounces you can expect this will be one of the first few big liquid name to do good. And this exactly what happened. In April starting stock was trading above 3300 which was pre corona highs. Soon stock started challenging the previous high made in 2016.

6. Stock did eventually crossed the previous pharma bull high to make new high and then at point 6 it retested as highlighted in the chart. This is where the news of Sputnik V vaccine and DRL’s role was published.

7. At this point around 5000+ stock is a buy for core portfolio as it has made new highs and is a pharma name. On top of all that it is vaccine play so even if market breaks down it will have much less impact on this stock. Also, in previous corona fall while market fell much more this stock fell only 25% signalling the relative strength. This can be a great stock for next 1 year or so to have in portfolio. You can avoid putting SL too and exit whenever you like based on other considerations as opposed to SL.

Let’s zoom in at point 3 –

When you see left hand side is half mountain followed by a big red candle(a big drop) consider it as game over of this run. Do not attempt to buy such fallen stars thinking that you are getting same stuff cheaper now. You will be repenting the decision of buying here for years and in many cases price may not recover ever. You can find many such examples for this pattern. In such cases just sell and forget about the idea for few years.

Let’s get back to Dr Reddy and how things are. Question is how would any individual know that there will be any vaccine talks after first half of 2020, how would anybody know that Dr Reddy will have role in that? If nobody could have known this then how such a big liquid name fell only 25% while market fell as much as 50%? And then within some 10-20 days stock made new high while market was still languishing? If this is not the perfect example of wisdom of the crowd that market is, no idea what else could be.

If we go global and try to see this concept and how market is able to price in information much ahead of any official inkling of what is going on then there are several examples. Let’s look at few of those here.

Moderna was one of the few stock which ran as much as 60%+ back in Feb 2020 signalling what we would come to know much later. Bill Gates had guessed that possibly 2 out of seven would be good enough candidate for vaccine and market has priced in very early who these two will be in Moderna and BioNTech. That is what market does. In Oct 2020 much before any efficacy data for vaccines was released Pfizer and Moderna ran hard. No way anybody could have known that 95% efficacy is going to come out in early November. But market did price in even this information. Hard to make the case that anybody could have known if President of USA did not know it while all of this was being done in USA only.

If you look at 6 Nov when efficacy data came out, Pfizer is up by 9% and at one time as much as 23%. On the other hand Moderna still up by 93% since that day and at one time up by 130%+. What explains this difference in rise? Another perfection from market.

The difference was in case of Moderna vaccine people who were found with severe symptoms after taking vaccines have not really taken the vaccines but placebo(no chemical impact but told to person taking that it is vaccine to compare this with person who actually took vaccine). But in case of Pfizer, total 10 people reported severe covid – 19 and one of those has got the actual vaccine while 9 were under placebo. So not 100% protection in case of Pfizer. That is why Moderna ran so much more than Pfizer. And market did all this and priced it before any of this information came into public domain. There were many big Pharma such as GSK, Novartis, Astra Zeneca, Sanofi, Merck and of course Pfizer among many who were trying to develop the vaccine. But market was backing (by rallying stocks) only Pfizer, Astra Zeneca and Sanofi. Now we know the actual status and how it all turned out. Market had given its verdict much before experts could gather information, analyse and announce officially.

If you keep track of so called experts and their predictions you would see how wrong they are. But then who is doing that. Wisdom of the crowd is a process by which democracy functions, market works and many other smaller example. Market is not some Newtonian mechanics instrument where you can change one variable and controlling for others you can figure out the impact. Neither economy works that way nor market. And that is why most economists have horrible track record of predicting things and so is the case with market experts. These are multi variate systems which are called complex adaptive systems(CAS) which follows chaos theory. In this whole lens of CAS, central idea is you can not predict anything in advance but be nimble to change your response as reality unfolds. So you have to accept your ignorance and stop making any prediction and then you stand much better chance to succeed both while managing economy and as market participant.

Price is the reality and everything else is the opinion. Nothing matters if you are consistently wrong about the prices. You can be logical, analytical intellectual but it does not count for anything because participants are human with emotions. So forget everything focus on what market is doing and see how that can translate into reality. Market discounts the future not the past or present. It could be wrong but mostly it will be right about how future can unfold. Whenever it is wrong market is fast in making amends and does not take much time to correct things to reflect the alternate future.

Let’s take another example and ultimate one which is much researched to understand wisdom of crowd concept.

January 28, 1986 at 11:38 AM Space Shuttle Challenger took off and only 73 seconds in flight it exploded killing all seven members of its crew and fell into Atlantic ocean. A major embarrassment for space program of NASA and USA.

Then US President Reagan appointed a commission known as Rogers commission. This commission had members such as Neil Armstrong (first human to walk on Moon), Richard Feynman a Nobel laureate in Physics (not some political Nobel in Peace, Literature or Economics), Sally Ride first American women in space, Charles Yeager who was a legendary pilot and first ever to cross the sound barrier in level flight. Charles Yeager was the first pilot to cross the sound speed of 1 KM in 2.9 s while flying. He flew so fast that it took less than 3 seconds to cover 1 KM or more. This commission worked over five months and finally submitted the report. It found that O – rings were at fault in this disaster and there were four contractors who supplied O – rings that were used in shuttle.

Feynman demonstrated that O- rings were at fault by putting them in ice water. It also revealed that NASA manager did not understand the basic concepts such as Safety Factor and this got revealed due to Prof Feynman’s investigation which was becoming pain for Commission and Chairman Roger mentioned this in public too. You make a bridge on which 1000 KG weight can be carried but in reality you estimate that only 250 KG at maximum will ever be taken on this bridge. So Safety Factor here will be 4 (1000/250). But say you took 250 KG weight on it and it cracked. There is no collapse yet but crack. This will mean the Safety Factor is zero here. It was not supposed to crack till 1000 KG but it did at 250 itself. This is what NASA managers got wrong. Feynman during this episode remarked,” For successful technology, reality must take precedence over public relations, for nature cannot be fooled.”

Let’s get back from fascinating subjects of space travel and shuttles etc. So it was 1986 without internet and certainly no social media, no WhatsApp, no Telegram. Event was televised but nobody had any idea what has gone wrong and why.

How long do you think market took to price in this disaster? Think before reading further.

Market did not wait for report to become public. It did not require submission of report. Forget submission it did not require the demonstration done by Prof Feynman either. All of these things took months.

Market actually priced in this disaster by 11:52 AM on the same day event took place barely after 13 minutes. That’s right. Market did not take even 15 minutes to price in this event. One of the four contractors of those O – rings was Morton Thiokol – a public listed company on New York Stock Exchange.

After 13 minute of that disaster NYSE had to halt the trading in Morton Thiokol as stock had hit the circuit and once opened it was down by 6% and by closing of the day it was 12% down.

If you take 3 month average volume that day it was 17 times more traded. In other three contractors – Lockheed, Rockwell and Martin Marietta fall was much lower and volume too was much lower. You may want to argue that NASA and people working in Morton Thiokol knew about this but then you can not explain away the 17x large volume and no insider trading issue was found either. All of these findings were published in a paper by Michael T. Maloney and J. Harold Mulherin in 2003.

Your head will start spinning if you know that market cap of Morton Thiokol reduced by around $200M on that day by closing and this is what they had to pay in terms of settlements, damages and lost future cash flows in reality later. How’s that for market pricing in the events in real time?

This example demonstrates that what took months for some of the brilliant minds of that time as part of Roger Commission to investigate and establish the cause of disaster, stock market which works on principle of wisdom of crowd did it in matters of few hours. And that too without any Scientists, Pilots, Astronauts, Physicists, Nobel laureate, Air Force Generals etc.

If you are interested you can research more and share with us what you find.

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.

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.

Just like any other day, we were scanning through some charts amid the gloom and doom of the market, we spotted a stock making a stupendous move from entertainment industry mostly into owning IP of vast music library and film production. Stock was at its ATH. The name of the stock may sound like it is some tip, Tips Industries. On closer look at chart it looked like 19 years old level of 183 was broken yesterday(01 Sep, 2020) and it came to our radar on 02 Sep, 2020. The price was 215.

Have a look at this chart –

The stock was a buy on 22 June when it crossed its pre covid level at 134. Of course, we did not know back then if Tips was even listed. Again on 01 Sep when it broke out of 185 levels after the retest. 02 Sep was the perfect entry point as per our set up of ATH theme having strong fundamental stock story. That is when we put a broadcast message on this –

Now let’s see basics of the stock –

Investors who are obsessively focused on value which often tends to relate with buying more and more at the bottom will frown over such opportunity because stock has just become 4-5x in 1 year. Since we do not follow the dogma of value investing it does not trouble us.

Some data points –
1. 51 employees, founded in 1975 and run by Taurani family.
2. 25000+ songs in genre of bhajans to remix, 6M followers on Facebook, 1M followers on Twitter and 30M subscribers on YouTube.
3. Falling data rates, cheaper smartphones and wide gamut of streaming platforms and entertainment going digital augurs well for the company.
4. Company is planning to produce 2-3 films a year.
5. Paying subscribers for music in India are quite low(~1%) and they are expected to grow to 2-3% which will help the company.

Debt free, promoter holding 75%, 15%+ ROCE, revenue affected in near term due to less advertising spend because of Corona, last year Free Cash Flow of 29 Cr and company is trading with market cap of 360 Cr. Chart is suggesting good fundamental news will start flowing in.

Mentioned at 215 and in 8 days stock is now up by 28% in such a chaotic market and now trading at 276. One can always be wrong in the market, and in this stock that point is closing below 194.

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.