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๐ Market Kya Lagta Hai
Nifty 50 ๐ข +0.41%
Midcap 150 ๐ข +0.10%
Smallcap 250 ๐ข +0.12%
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Sectors in Focus
Major Corporate Developments This Week
- Whirlpool: Company and PG Electroplast join hands to contract manufacture select Whirlpool Branded Semi-Automatic Washing Machines.
- Websol Energy: Company will add 600 MW cell production capacity at its Falta plant.
- HG Infra: Arm HG Banaskantha Bess signs battery energy storage purchase agreement with NTPC Vidyut Vyapar Nigam for procurement of 185 MW/ 370 MWH on long term basis
- Greaves: Greaves Electric Mobility files DRHP with SEBI, NSE & BSE for IPO.
- Aurionpro Solutions: Company expands into Europe with โฌ10 million acquisition of Fenixys
- Welspun Corp: Company wins Rs 130 crore order from Saudi Arabia for steel pipes and coating
- NALCO: Company signs mining lease deed for amalgmated Utkal-D & Utkal E-Coal block to enhance coal production capacity to 4 MTPA
- Ceigall India: Company Arm signs concession agreement with NHAI for โน981 crore project
- Seamec: Company signed a BIMCO Charter Party with Asian Energy Services to deploy the vessel "SEAMEC III" for SAT diving operations on India's East Coast.
- Godawari Power: Company acquired a 51% stake in Jammu Pigments Limited , a metals recycling company, for Rs 255 Cr. GPIL already owns 49% of JPL.
- Dixon Technologies: Company signs MoU with Cellecor Gadgets for manufacturing of refrigerators and its related components for Cellecor
- PowerMech: Company bags order worth โน186 crore from Jaiprakash Power Ventures.
- Gensol Engineering: Company bags EPC contract worth โน897.47 crore from NTPC Renewable Energy for development of 225MW grid connected solar PV projects at Khavda, Gujarat.
- Mankind Pharma: Company inks licensing pact with Innovent to commercialise Sintilimab in India.
- Gland Pharma: Arm receives 10 observations from ANSM France for manufacturing facility in France
- Bansal Wire: Company launched its new Product in the name of Hose Wire (Brass Coated Hose Reinforcement Wire)
- Redington: Company partners with Tunga Aerospace to drive UAV innovation in India
- Cochin Shipyard: Adani places India's largest order for 8 tugs under the Make in India initiative for โน450 crore with the company.
- VA Tech Wabag: The company wins EIB & KFW funded DBO order in Zambia for wastewater treatment plants worth โน700 crore from Lusaka Water Supply and Sanitation Co.
TechnoFunda Investing Quote from Legends -
This quote by Stanley Druckenmiller emphasizes the balance between capital preservation and aggressive risk-taking when opportunities arise. He suggests that successful long-term investing requires protecting your capital to stay in the game during tough times, but also being bold and decisive when a high-conviction opportunity presents itself. The phrase "go for the jugular" implies taking a strong, focused position when the odds are highly favorable. The idea of having "courage to be a pig" refers to being unapologetically greedyโbut only when the opportunity justifies itโcontrary to the common belief that greed is inherently detrimental. This dual strategy underscores the importance of both discipline and courage in achieving superior returns.
๐ Book I'm Reading This Week
Fooling Some of the People All of the Time by David Einhorn offers a gripping account of the author's real-life battle against corporate fraud and regulatory apathy. The book revolves around Einhorn's detailed investigation into Allied Capital, a company he believed was engaging in dubious practices, including misleading accounting and fraudulent activities. Through the lens of this saga, Einhorn provides readers with a deep dive into the complexities of short-selling, the challenges of exposing wrongdoing, and the resistance faced from powerful entities. A must-read for those interested in finance, corporate ethics, and the intricacies of the stock market, the book highlights the critical importance of diligence, courage, and integrity in navigating the financial world.
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TechnoFunda 101 - Power Capsules
Learn technical as well as fundamental concept in a simple way
Mastering the Relative Strength Index (RSI)
TheThe Relative Strength Index (RSI) is a versatile momentum oscillator that traders and investors use to gauge the speed and magnitude of a stock's recent price movements. Whether you're spotting potential reversals or confirming trends, RSI can be a valuable addition to your technical analysis toolkit.
What is RSI?
The RSI is a momentum oscillator developed by J. Welles Wilder. It measures the strength of recent price changes to identify overbought or oversold conditions. RSI values range between 0 and 100, with specific thresholds offering actionable insights.
Key Levels to Watch
- Above 70: Overbought, signalling a potential reversal or correction.
- Below 30: Oversold, suggesting a possible bounce or recovery.
- Around 50: Neutral zone, indicating neither bullish nor bearish dominance.
How RSI Works
The RSI compares the average of upward price changes to the average of downward price changes over a specified period, usually 14 days.
The formula:
RSI = 100 - ( 100/1+RS)
Where RS = Average Gain / Average Loss
How to Use RSI Effectively
1. Overbought and Oversold Signals
- Overbought (RSI > 70): A stock may be due for a pullback, but it doesnโt mean you should sell immediately. Combine RSI with other indicators for confirmation.
- Oversold (RSI < 30): A stock might be poised for a rebound, making it a potential buying opportunity if other technical or fundamental factors align.
2. Divergences
RSI divergence occurs when the stock's price moves in the opposite direction of the RSI.
- Bullish Divergence: Price forms lower lows, but RSI forms higher lows. This suggests the selling momentum is weakening.
- Bearish Divergence: Price forms higher highs, but RSI forms lower highs, indicating weakening buying pressure.
3. Trend Confirmation
- In an uptrend, RSI often stays above 40 and hits 70 or more.
- In a downtrend, RSI typically remains below 60 and hits 30 or lower.
4. RSI as Support and Resistance
- RSI levels can act as dynamic support or resistance zones, especially in trending markets.
Example
Consider a popular IT stock with strong momentum. During a rally, the RSI surges above 70, indicating overbought conditions. While some traders might expect a reversal, the RSI remains elevated, signaling the strength of the uptrend. This is a classic case of โRSI staying overbought during strong trends.โ
Later, a bearish divergence occurs as the stock forms new highs, but the RSI fails to follow suit. This divergence, coupled with weakening volume, signals a potential trend reversal, and the stock corrects soon after.
Caution: Avoid RSI Pitfalls
- Overbought/Oversold Isnโt Absolute:
Just because RSI is overbought doesnโt mean the stock will immediately reverse. Strong trends can keep RSI elevated for extended periods.
- Confirmation Matters:
Always use RSI in conjunction with other technical or fundamental factors. Blindly trading based on RSI levels can lead to false signals.
Conclusion
The RSI is more than just an oscillatorโitโs a window into the strength and momentum of price movements. By learning to interpret its signals and combining it with broader analysis, you can enhance your trading decisions.
๐๏ธ My Weekly Podcast For You
Keep Compounding...
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Vivek Mashrani, CFA
Founder, TechnoFunda Investing
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