Sunday, August 22, 2010

Sectors with potential

[added: I have a poll going (just look at the right column). Please vote in it, so that we get a large response.]

Inside the stock market universe, there are different undercurrents. Some sectors are outperforming, while some are underperforming. This cycle of performance itself has two components - transitory and long term. There are sectors which go through a rally for a short period - transitory. These bursts of enthusiasm occur mainly due to short term interest in the sector, which fizzles out soone enough.

Long term sector outprformance is what traders as well as investors should be looking at. Such moves last long enough for traders to make money.

This concept of transitory and long term outperfomance applies to individual stocks also. If the broad market is falling, most stocks will go with it, therefore what we are seking is outperformance rather than a different path.

Just to give an example, last year around August 2009, I was upbeat on a stock called V-Guard.Then it was selling around 80. Now, a year later it is selling around 160. That is a 100% return. Probably, there are many other stocks which have given similar returns over the past 1 year, but we do not know about all of them - I had the charts of V-Guard which I saw was likely to outperform. My point is: if you get a stock like this, stick with it. There were periods when the stock was doing nothing - that's part of the market, so far the charts hold - which means prices do not go below your cutoff point, we have to accept trading ranges in long term uptrends.

7 comments:

ANAS said...

Respected Sir, it me .. Thank You for your valuable article today. It answered 70 percent , to my last query . Hopefully waiting for the remaining part. Thank You once again for staying in touch with us.. (Just wanted to add : today is my elder brother's birthday . Just requesting all of the readers to wish a happy and healthy long life for him] THANKS. BYE.

rajv malik said...

sukhani ji namaskar !

pl do share with us a few stocks which you think can give us v guard kind of results.

regards

rani patel said...

I checked the chart of V-Guard and saw that it was moving down and listless. For educative purpose could you please tell what was it you saw that told you it would double?

Dr.satish said...

Res Sir

Thanks for your valuable tips.
Pl.confirm whether Chambal Fert.
is showing inverted Head & Shoulder
with Neckline @72 in weekly chart ?

Dr. Satish Karandikar
Nashik
9822041678

men said...

Dear Mr. Sudarshan,
Thanks for putting my query on the net. I watch cnbc mainly for you, I would like to add I learnt the basics of ta watching cnbc (Prakash Gaba, Rajat Bose, Dhiraj Mohindar, the late Mathew and now you are some of the people I love to watch and hear),and I took a bigger step forward watching ndtv which used to come at 430 , though I have a long way to go I prefer watching the other channels purely for improving TA skills. "No doubt Udayan was the blue eyed poster boy of the business channel, but things have changed since then", akin to Hero Honda giving Bajaj Auto a run for its money in the share market.
Thanks once again, I want to learn to fish, not eat a fish, hence my preference. Cheers!!!!!!!!

men said...

Mr. Sudarshan, could you please give us your list of stocks which you think will out-perform? Canara bank is one that you have openly disclosed, are there any other hidden gems that you have come across. Also your views on RIL will be highly appreciated.
Thanks,

Bhupesh said...

I agree that some time stocks do not move, but what happened to the stock like s kumars nationwide. It is not moving at all for last two weeks and according to you it is in uptrend. Should I hold it or SELL.

Bhupesh