|
TechnoFunda Investing Newsletter
Weekly Wrap - Issue # 60
|
|
|
|
|
|
Welcome to the Technofunda Investing community. Thank you for being Life Long Learner...!!!
Share this newsletter Via: LinkedIn, WhatsApp, Twitterโ
You can view all previous newsletters hereโ
๐ Market Kya Lagta Hai
Nifty 50 ๐ป-0.23%
Midcap 150 ๐ป-0.28%
Smallcap 250 ๐ป-0.79%
|
Sectors in Focus
Major Corporate Developments This Week
- Polyplex Corporation: Company announced a plan to add 52,400 MTPA of BOPET Film manufacturing capacity in India by H1 FY2027-28. This Approx. Rs 558 Cr investment.
- NIBE Ltd: Company received "Mega Project" status for its Shirdi manufacturing facility, to produce aircraft parts, at a revised cost of Rs. 800 crores.
- Interarch: Company gets orders worth โน221 cr in semiconductor & lithium-ion battery sector, from Tata Projects
- JSW Energy: Acquires 125 MW renewable energy assets from Hetero Group for โน630 crore via JSW Neo Energy.
- HEG: TACC Limited, has signed a non-binding MoU with Ceylon Graphene Technologies to advance graphene tech.
- Waaree Energies: Company to acquire 100% stake in Enel Green Power India from Enel Green Power Development for โน792 crore.
- BEL: Company receives orders worth Rs. 561 Crores
- Larsen & Toubro: Company launches second multi-purpose vessel for the Indian Navy from its Kattupalli Shipyard near Chennai.
- HFCL: Company bags advance work order worth 2501 crore rupees from BSNL
- AIA Engineering: Company approved Vega ME's plan to set up Hi-Chrome Grinding Media plants in China and Ghana through its subsidiaries, enhancing supply chains, market access, and cost efficiency.
- Axis cades: Company appoints Alfonso Martinez Fernandez as Group CEO and Additional Director in the capacity of Managing Director of the company
- Glenmark Life: Company announced Change of Name of the Company from ''Glenmark Life Sciences Limited'' to ''Alivus Life Sciences Limited''
- Welspun Corp: Company signed a MoU with Saudi Aramco to establish a state-of-the-art Longitudinal Submerged Arc Welded line pipe manufacturing facility in Saudi Arabia.
- Wockhardt: Company expects revenue boost from new drug to combat pneumonia-causing superbugs.
- Hachi Energy: The company plans to raise funds worth โน4,200 crore via QIP.
- Caplin Point Laboratories Ltd: Steriles division gets USFDA approval for Levetiracetam injection.
- C.E. Info Systems: Qualcomm enters a strategic collaboration with the company to accelerate 'Make in India' solutions for automotive.
- TVS Motors: The company announced its entry into Morocco in collaboration with its distribution partner, Hindi Motors. It is launching a wide range of two-wheelers, including the TVS Ntorq 125, TVS Raider 125, and TVS Apache 160 and 200, in Morocco.
- Bajaj Healthcare: The company receives a new contract for manufacturing, marketing, and selling the product Magnesium L Threonate (Magteinยฎ) in the Indian market.
- Bharat Dynamics: The Ministry of Defence has signed a contract with the company for the supply of MRSAM for the Indian Navy at a cost of approximately โน2,960 crore.
TechnoFunda Investing Quote from Legends -
Mark Minervini's quote highlights the principle of aligning investments with strength and momentum rather than weakness. Buying "on the way up" refers to investing in stocks or assets that demonstrate a consistent upward trend, reflecting strong demand and potential for further gains. In contrast, buying "on the way down" often involves catching falling prices, which can lead to compounding errors if the decline continues. The essence of the quote is to focus on compounding wealth through disciplined, evidence-based strategies rather than trying to predict bottoms and risking further losses.
๐ Book I'm Reading This Week
New Market Wizards by Jack D. Schwager is a captivating sequel to his iconic book Market Wizards, offering readers a rare glimpse into the minds of some of the most successful and innovative traders in financial markets. Through a series of in-depth interviews, Schwager uncovers the strategies, philosophies, and experiences that have propelled these market wizards to extraordinary success. The book provides invaluable insights into diverse trading styles, risk management techniques, and the mental discipline required to navigate the complexities of markets. It is a must-read for traders and investors seeking inspiration and practical wisdom from the best in the field.
|
TechnoFunda 101 - Power Capsules
Learn technical as well as fundamental concept in a simple way
Post-Earnings-Announcement Drift (PEAD): A Powerful Anomaly in Investing
In the world of investing, quarterly earnings announcements are eagerly anticipated events. But what happens after the announcement can reveal an anomaly that savvy investors can capitalize onโthe Post-Earnings-Announcement Drift (PEAD). Letโs dive into what PEAD is and how it can impact investment strategies.
What Is Post-Earnings-Announcement Drift?
PEAD refers to the tendency of a stock's price to continue moving in the same direction as its earnings surprise (better or worse than expected) for days or even weeks following the announcement. This phenomenon suggests that the market doesnโt fully adjust to the new information immediately, leaving opportunities for investors to benefit from the delayed reaction.
How PEAD Works:
- The Earnings Surprise:
When a company releases earnings that significantly differ from analyst expectations, it creates an immediate market reaction. A positive surprise often leads to a price jump, while a negative surprise triggers a drop.
-
The Drift:
Even after the initial reaction, the stock's price tends to keep drifting in the same direction for some time. For example:
- A company reports earnings 20% above expectations. The stock price spikes by 5% on the announcement.
- Over the next few weeks, as more investors process the news, the stock price may climb another 5โ10%.
-
Why the Delay?
- Investor Psychology: Many investors take time to process and act on new information.
- Institutional Momentum: Large institutions often take days to adjust their portfolios fully.
- Market Inefficiency: Behavioral biases and slow dissemination of information create opportunities for the drift.
โ
Strategies to Leverage PEAD:
- Earnings Surprise Screening:
Identify stocks with significant earnings surprises. Tools like earnings calendars or stock screeners can help filter these opportunities.
- Trend Confirmation:
Look for technical signals such as higher volume or a bullish candlestick pattern post-announcement. These can confirm the likelihood of a continued drift.
- Hold Period:
Studies suggest the drift often persists for 1โ3 months after the announcement. This timeframe can guide your holding period.
- Sector Insights:
PEAD is particularly strong in industries like technology and healthcare, where earnings surprises are more common and impactful.
โ
Risks and Considerations:
- Reversion Risks: If the market overreacts, the drift may reverse. Monitor price movements carefully.
- Broader Trends: A weak overall market can dampen the effects of PEAD, even for stocks with positive earnings surprises.
- Earnings Quality: Ensure the earnings surprise isnโt driven by one-time events or accounting gimmicks.
โ
Conclusion:
Post-Earnings-Announcement Drift offers a compelling example of how behavioral finance and market inefficiencies create opportunities. By understanding and leveraging PEAD, investors can position themselves to benefit from the delayed reactions of the market.
So next time youโre analyzing an earnings announcement, remember: the story doesnโt end with the initial reactionโit might just be beginning.
โ
๐๏ธ My Weekly Podcast For You
Keep Compounding...
|
|
Vivek Mashrani, CFA
Founder, TechnoFunda Investing
|
|
|
You Can Share This Newsletter...!!!
|
|
|
Follow all my content on my social media handles below
|
Disclaimer:
- The content provided on this page by the publisher is not guaranteed to be accurate or comprehensive. All opinions and statements expressed herein are solely those of the author.
- The information found on this newsletter should not be interpreted as investment advice, nor does it express any viewpoint on the future trading prices of any company's securities. The opinions and information shared here should not be taken as specific guidance for making investment decisions.
- The content, including opinions and expressions, present on this newsletter, is not a direct or indirect offer or solicitation to buy or sell securities or financial instruments mentioned. The securities quoted are for illustration only and are not recommendatory.
- Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
- By accessing the site or affiliated social media accounts, you signify your agreement to this disclaimer and the terms of use.
- Neither the publisher nor its affiliates assume liability for any direct or consequential losses arising directly or indirectly from the use of the information provided in this content.
|
|
|
โ