Month's Price Volume Action - 28th Jul'24
All the Price Volume action at one place !
Hello All,
The Sensex & Nifty has hit a new all-time high, reflecting the ongoing bull market in Indian markets. Specific stocks and sectors are performing exceptionally well, with re-ratings happening rapidly. Along with that the Budget has been presented. Lot of opinions floating around, keep absorbing them.
Let's find out what stories did the other numbers tell us last month. In case you are new here, the about page for our Newsletter is here.
First lets see, where did the money come from? Both, FIIs and DIIs have been buying Equities across last 4 weeks.
The PE of Nifty Smallcap100 is at 29.9 with ~3% gains over one month. Some consolidation now can be observed as over last month, Out of 100, only 30 stocks have gained more than 5% whereas 44 have negative returns.
How have the Sectors panned out last month ?
At the Top - Hardware Technology & Equipment Stocks
Top 5 Gainers from ( >400cr Mcap & > 2% Monthly Change)
How to read this ?
For 5Y, returns are max for S&P Industrials at 446% (Greenest) and min for Nifty Media at -3% (Red). Similarly, one can check for each time period. The table is sorted by 5Y returns.
Nifty 50 Returns over last month
Out of 50, 44 stocks gave >5% returns in last 1 year and 42 gave >5% in last 6 months.
→ In last 1 year, 32 have beaten the Nifty 50 returns (26.3%).
→ Only 3 out of 50, gave >100% returns in 1 year. (Coal India, Adani Ports & MnM).
→ While 6 companies gave negative returns in last 1 year. These are
Asian Paints (-12%), IndusInd(-1%) , Bajaj Finance (-7%)
Bajaj Finserv (-2%), Kotak M bank (-3%) & HDFC BANK (-3%)
The Current PE = 23.4
Nifty 50 Historical Avg PE at different time periods are :
1M = 23.2 ; 3M = 22.3 ; 6M = 22.5
1Y = 22.4 ; 2Y = 21.9 ; 5Y = 25.4
"Stocks Touching 10-Year High" signifies that a stock has reached its highest price level in the past decade. This indicates long-term strong performance and positive market sentiment. It suggests robust business growth and investor confidence, potentially attracting more interest and indicating sustained upward momentum. However, it may also prompt caution regarding overvaluation. There can be others also which might be not part of the list but sharing here only those which have good ROCE/ROE/OPM/Revenue growth and also not overvalued.
Great momentum stocks indicating strong short-term and medium-term performance, driven by positive news, earnings reports, or market trends. Do note the valuations of the stocks!
These are stocks with their End of day BSE+NSE delivery volume trading 2 times of Avg Month NSE+BSE Delivery volume. Volume Multiplier is ratio of delivery of Volume at the end of the day to Average delivery volume for the Month. This indicates
- a surge in investor interest or trading activity.
- increased volatility (Opportunity for Short term).
- speculative risk.
- Improved liquidity.
It's important to note that while increased delivery volume can be a sign of significant market interest, it does not guarantee that the stock will perform well (upside/downside) in the future.
Traders and investors should consider various other factors, such as company fundamentals, market conditions, and their own investment objectives, before making decisions based solely on trading volume data. Additionally, past performance is not indicative of future results, so thorough research and risk management are essential in any strategy.
These are not recommendations to buy or sell !!
Back testing
Now, lets see the back test of this strategy over a different periods. The stock selection means that the stocks being selected are either from Nifty 50 or Nifty 500.
Tried out rebalancing of such selected stocks on a different frequencies like monthly or quarterly so that we give the stock a change to perform over such periods and then compare and then do the selection/deselection of the portfolio. Also, to compare the returns, have selected the benchmark performance as Nifty 50/500.
The above comparison gives the strategy 2 as the best strategy keeping quarterly as the best refresh and Nifty 500 as the optimum pool for stock selection. I have checked returns of Nifty 50 as well (Strategy 3) and the benchmark returns have dropped from 281% to 241%.
As per this strategy, if the rebalancing is reduced to Monthly (Strategy 1) the returns drop significantly.
If we limit the stock selection to Nifty 50 (Strategy 4), the strategy returns drop to a meagre 107% which is below par the Nifty50 CAGR.
Stocks at 52-Week High indicates that a stock has reached its highest price in the past year, reflecting strong performance and positive market sentiment. This milestone can signal upward momentum but may also suggest potential overvaluation. Investors often watch these stocks for further gains or reassess their strategies based on this performance indicator. For some traders, a stock hitting a 52-week high might signal a breakout, suggesting that the stock could continue to rise if it surpasses previous resistance levels.
All time high Stocks are important to track and how they have historically provided returns is shown below.
I have taken a period of 5 years to back test this and compared the returns with Nifty500 Benchmark.
In technical analysis, the 200-day DMA is a long-term trend indicator. When the current price is below this level, it might signal a bearish trend or a downturn. While other aspect is that these leading stocks may be temporarily undervalued, presenting a potential buying opportunity for investors who believe the stock will revert to its mean or rise above the 200-day DMA again especially where the valuations are sane.
Tata Technologies Ltd.
IndusInd Bank
TATA Motors
Deepak Fertilisers
ITC
LIC
Banco Products
Thanks for reading till now. I hope these 5-7 mins have added some value in your analysis.
Thanks,
Curious Investor