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Thursday, July 26, 2012

Thursday MidCap Stock Carnage on NSE...Short term Bottom is Near!

Stock Carnage is a strange phenomena.. It seems like the world is about to end for the small investor who is actually holding the stock. Investor thinks that this stock is falling like dead rock and probably the company is about to shut shop. He tries to sell at any price, but noone is buying and suddenly the lower circuit is hit and investor is left holding the hot potato till the market opens the next day. Investor resolves to sell the stock at any price tomorrow morning, but the saga goes on for next few days till the stock almost seems worthless and investor is left in deep pain holding a stock which is down by 70-80%...

Perversely, Stock crash are a Golden opportunity for Vultures  to own good companies at crazily low prices. Lets see the Carnage that happened today in Midcap select stocks on Thursday today.. Today was a F&O expiry session and it literally become a "Expiry" session where some of these Midcaps actually Died/Expired and went to Hell !! Lets look at the charts and good buying opportunities that will come in next few days...




Tulip Telecom has the dubious distinction of being at the top of the Losers list today. The stock crashed by a whooping 40% initially where some sensible buyers came in and took advantage of low prices. Stock touched a intra low of Rs 67 where value buyers came in and Tulip finally closed at Rs 85. Stock has almost formed a double bottom and recovered. Pls see the chart below:



Era Infra presented a crazy and scary picture below. Fundamentally, the stock is in deep value zone, however technically there may not be a support for next 1-2 days. Buy at further dips.



Parsavanath is the first one to get in trouble wherever there is any trouble on bourses. It may stop only at 30-35 Rs where it becomes a buy again.



Pipavav is in August company. With great Mr Jhunjhunuwala as one of its investors, the stock has bright prospects, but the immediate downturn may stop at Rs 50 or so.



These are only some samples with many Midcaps being battered today. With the battering of Indices many analysts also are getting scared and talking of 4500 levels in Nifty. We look at chart of Nifty and Midcap index and realized that short term Bottom is very near and TV Analysts are wrong as ever. Atleast they are consistent, and consistently wrong!

Nifty long term shows a immediate support at 5000 and second strong support at 4800. My feeling is that 4800 may not be touched any time soon.



Nifty triangle formation also shows a support level somewhere close to 4800 below.



Midcap index having survived a Carnage today with a support at 2000 levels. if 2000 breaks and breaks convincingly, next support is at year's low at 1800. This means 10% more crash in Midcaps values. However possibility is low as we speak.



Carnage that we saw today often marks the end of a downturn. Patient investors find great value when panicky hands drop stocks like hot potatoes. These are times to invest and create wealth, slowly and patiently. Happy investing! Keep writing in to us.

2 comments:

  1. Hello Fundoos,

    Good work ! Please keep writing. We are hungry for more! Thanks

    Regards,
    amitabh

    ReplyDelete
  2. Naren, how will you describe the stocks Tulip and Glodyne now? They are like falling knifes, may be good opportunities for value (institutional) buyers. What about the case of retail investor, who won't be aware of these tricks (gambling is right word?) ?. Will the retail investor aware of how to handle upper/lower circuits?

    When SEBI probed into the matter, it was obvious that group of traders played the game to bring down the price. Poor fellow, retail investor will be trapped.

    Now, what would be the reason behind the continuous fall?

    ReplyDelete

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