In this post am covering a couple of best performers in the last 3-4 years.
The above two stocks have been some of my worst misses as even though i liked the companies in 2010-2011 but did not have the patience or conviction.
Here are the posts on them Kaveri and La Opala which was another bad miss ( Maybe coz both did nothing for a year odd post the initial 20% move )
Let us look at the short term charts for Kaveri Seeds
-> The stock has corrected 20% in last few days on decent volumes ( Last 6 months volume look huge coz of it not being adjusted for split/bonus) . More importantly delivery volumes are with 60-80% delivery marked which implies somebody is genuinely selling.
-> This is not the first time stock has seen a drop but the speed of the fall post making a lot of attempts at 600-650 is a weak signal.
-> Technically its a major trend change signal and can drop to 450-500 or even 350 in the worst case.
-> So if you like the stock fundamentally one can accumulate accordingly but technically one thing is certain that a short term top is in place at 650-670 and it would be tough to surpass that in the short to medium term.
It would be interesting to see if this is just a correction or a breakdown.
Cera Sanitaryware
-> The stock looked expensive to people at 300 fundamentally but it went up till 1300 on the back of continuous strong performance and backing by some marquee investors.
-> Post the recent results the stock went up from 950 to 1350 in a jiffy. But what is unnerving is the fact delivery volumes were around 25-30% on NSE and only 5-10% on BSE. So that hints of speculation increasing finally after it becoming a 30-40 bagger in 5 years.
-> These are either signs of stock becoming a market fancy / distribution or the major part of the returns getting over. Although it is too early to call for but a short term top seems to be in place at 1350 +
Whether this turns out to be a correction or start of a sideways/downward trend is to be seen.
The above two stocks are just an academic exercise to understand whether stocks top out after making such patterns of large volume speculation or delivery selling. As learning impact of such observations helps you take profits of the table or revisit your calculations.
Last had seen such a chart in Hawkins
Also such a technical exercise does not help as you cannot short or write options in midcaps/smallcaps but this will help us when we find some big movers in our portfolio and when to decide to take profits of the table.
By the way please do not take the above analysis as a buy or sell recommendation 🙂 but if you do hold take it as a signal to revisit your stance on the companies.
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