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Sectors in Focus

Major Corporate Developments This Week

1. Menon Bearings: Company has started commercial production of ‘thrust washers’ with enhanced capacity at its new manufacturing facility at Kolhapur with a capacity to produce 45,00,00 units per annum
2. B L Kashyap and Sons: Company secured new orders aggregating to Rs 1.60 Billion
3. Mankind Pharma: Company to buy Bharat Serums for ₹13,630 cr EV
4. KPI Green: Company gets LoI from Gujarat Urja Vikas Nigam for 620 MW grid-connected solar & hybrid RE projects
5. Hero Motocorp: Income Tax Appellate Tribunal order in favour of the co, the entire tax demand of Rs 2,336.71 crore for Assessment Year 2011-12 has been quashed
6. Sun Pharma: Company gets U.S. FDA approval for LEQSELVI tablets used to treat severe alopecia areata.
7. Welspun Corp: Company gets order from Middle East for supply of LSAW pipes and bends.
8. Brand Concepts: Company partners with ABG juicy couture LLC to launch women’s handbags and travel accessories under the brand name juicy couture in India
9. Shilpa Medicare: Company unit's manufacturing facility in Karnataka gets GMP certification from COFEPRIS- Mexico
10. Titagarh Rail Systems: Company begins export of traction converters with first shipment to Italy
11. Krsnaa Diagnostics: Company gets signed agreement from Madhya Pradesh government for setting up & operating MRI scan machines at 5 government hospitals
12. Bajel Projects: Company gets Rs 586 crore order from Power Grid for a period of 23 months
13. Tata Consumer: Company approved rights issue size of 36.6m shares worth 29.98 Billion Rs, company approved rights issue price at 818 Rs per share
14. Mahindra & Mahindra: Company announces its latest SUV brand name, Mahindra 'Thar ROXX' to strengthen its Thar portfolio
15. Zaggle Prepaid: Company has entered into an agreement with PNB MetLife India Insurance Company to provide Zaggle Save Employee expense management and benefits
16. EMS: Company received order worth 5.35 Billion rupees
17. Tata Elxsi: Nidec Corporation and company have signed a memorandum of understanding to enhance software development capability
18. JTL Industries: Company approves allotment of 1.42 crore shares to eligible QIBs at issue price of Rs 211/share aggregating to Rs 299 crore
19. Jubilant Ingrevia: Company issued commercial papers worth 1b Rupees

TechnoFunda Investing Quote from Legends -

Charlie Munger's quote emphasizes the importance of patience and delayed gratification in successful investing. He argues that the ability to wait is a crucial attribute for investors, as immediate action is not always beneficial. Many people struggle with this because they seek quick returns, driven by a desire for instant gratification. Munger suggests that if one lacks the natural inclination to defer gratification, it requires concerted effort to develop this trait. This discipline of waiting allows investments to mature and leverage the benefits of compounding over time, ultimately leading to substantial long-term gains.

📚 Book I'm Reading This Week The Outsiders In this refreshing, counterintuitive book, author Will Thorndike brings to bear the analytical wisdom of a successful career in investing, closely evaluating the performance of companies and their leaders. You will meet eight individualistic CEOs whose firms’ average returns outperformed the S&P 500 by a factor of twenty—in other words, an investment of $10,000 with each of these CEOs, on average, would have been worth over $1.5 million twenty-five years later. You may not know all their names, but you will recognize their companies: General Cinema, Ralston Purina, The Washington Post Company, Berkshire Hathaway, General Dynamics, Capital Cities Broadcasting, TCI, and Teledyne. In The Outsiders, you’ll learn the traits and methods—striking for their consistency and relentless rationality—that helped these unique leaders achieve such exceptional performance. List of All Books I have Shared →

TechnoFunda 101 - Power Capsules

Learn technical as well as fundamental concept in a simple way

Stage Analysis

Stan Weinstein's "Stage Analysis," introduced in his book Secrets for Profiting in Bull and Bear Markets, divides market trends into four distinct phases. Each phase offers unique opportunities and challenges, providing a structured approach to understanding and anticipating market movements. By focusing on technical analysis, particularly price action and volume, traders can identify the current phase of a stock, thereby gaining insights into its potential future trajectory. This framework helps in making informed decisions about entry and exit points, ensuring strategies align with the market's natural rhythm.

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Stage 1: Bottoms

The first stage begins at the end of a downtrend, where a security enters a base-building process. In this phase, new shareholders replace the old guard, gradually replacing fear with hope, which eventually turns into greed. Buying too early during this phase can be risky, as the process often involves complex testing and new lows before support is firmly established.

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As the pattern nears completion, accumulation tends to accelerate, marked by higher-than-average volume spikes that indicate enthusiastic buying interest. This usually signals an impending breakout, leading into Stage 2. Base breakouts often cause significant price gaps on high volume, which remain unfilled for a long time. This situation forces traders to enter positions within a high consolidation pattern rather than waiting for a pullback to test new support. When a pullback does occur, it often offers an excellent reward-to-risk ratio, as the transition into the second stage tends to be reliable, with few failed breakouts, allowing for tightly placed stops.

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Stage 2: Uptrends

Stage 2, known as the advancing stage, begins when a stock breaks out from the basing stage with notable volume. This transition from a neutral to bullish market sentiment attracts a small group of committed buyers at first, followed by a larger group of weaker-handed chasers and followers as the trend progresses.

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A key characteristic of Stage 2 is the sustained upward movement in the stock's price, often accompanied by increasing trading volumes. This rise in interest confirms growing investor commitment, reinforcing the trend's strength. During this phase, the price typically moves above key moving averages, such as the 30-period moving average, which acts as a dynamic support.

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The middle of Stage 2 often features a high-volume continuation gap, marking the halfway point of the uptrend. This surge to higher ground introduces weaker hands into the trade, making the price action more volatile. Early adapters should tighten their stops when uptrends exhibit this emotional intensity, as late-stage uptrends can produce the most vertical price action and rapid profit-building of any segment within this stage.

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Stage 3: Tops

Stage 3, known as the top area, marks a significant shift in the stock's cycle. This phase signifies the transition from an uptrend to a potential downtrend, characterized by a leveling off of the stock’s price movement after the advance in Stage 2. It's a period of distribution where early investors begin to take profits, and new investors may enter based on the stock's past performance rather than its future potential.

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During this phase, price movements become less definitive, often moving sideways and creating a resistance level that the stock struggles to exceed. The price hovers around key moving averages, such as the 30-period moving average, without a clear direction. This indecisiveness in price action is a crucial indicator of weakening momentum.

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Volume analysis during Stage 3 is vital. A divergence between price and volume often emerges; while prices might remain high, trading volume usually decreases. This reduced volume suggests a lack of conviction among investors, indicating that the stock may not sustain its previous upward trajectory.

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Stage 4: Downtrends

Stage 4 marks the declining phase, where a stock transitions from a period of distribution to a clear downtrend. This phase is characterized by a sustained drop in the stock’s price, often triggered by a decisive break below key support levels and moving averages, like the 30-period moving average.

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The declining phase is typically accompanied by increasing trading volumes, reflecting a growing consensus among investors that the stock’s peak performance is over. Negative news or poor earnings reports can accelerate this phase, further driving down the price.

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🚀 My Content For This Week 🎬 YouTube: Technical Analysis for Beginner Investors | Price Action for Stock Market​ ​ ​ 📋 Twitter: Vivek Mashrani, CFA @MashraniVivek 🕺🕺 Have you ever wondered how a company's profits can grow significantly faster than its sales? This phenomenon is largely due to OPERATING LEVERAGE. Let's explore how it works with a practical example… Imagine running a Lemonade Stand....!! Detailed thread.... https://twitter.com/i/web/status/1817168871368864250 5:33 PM • Jul 27, 2024 0 Retweets 1 Likes Read 1 replies ​

🎙️ My Weekly Podcast For You

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Keep Compounding...

Vivek Mashrani, CFA Founder, TechnoFunda Investing

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