BSE Power Index Breakout, Daawat(LT Foods) Assessment

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March 5, 2021

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Strategic Alpha

Dear StrategicAlpha Tribe Member,


In today’s Interesting Charts Segment, I Will be sharing some important developments on charts that might help you make informed decisions. So WIthout wasting much time, Let’s directly jump off to the charts itself.

Before going through the charts, I recommend that you should have read the blog below:-

https://strategicalpha.blog/2020/04/19/bull-market-leaders-create-fortune-why-there-is-a-strong-case-for-old-economy-stocks-to-be-upcoming-bull-market-leaders/

 You will get clear about my context of the charts I am posting below.

So, let’s begin

                                       BSE Power Index has Given a Clean Breakout on Weekly Charts

This was the chart I discussed last Weekend During My Webinar. If you haven’t attended any of the learning Webinars that I take, Do join my next webinar. Don’t miss it.

Since the start of the week, BSE Power Index has been more bullish and there is one more green Candle added to the breakout candle above. BSE Power Index has Given a Clean Breakout out of 13 Downward Sloping channels, which I consider to be a very rare pattern. The last time BSE Power Index massive breakout happened during 2003 Period, In those times, Power Index Stocks Like BHEL, Tata power became Multibaggers. 

Are we going to see a similar pattern now? 

Only time will tell that. At least, this Pattern Breakout suggests that the index itself can double over the next 3-5 years. If the index doubles, sector overweights will give nearing Index Returns, however, index underweights which are undervalued is at the highest possibilities of becoming Multibaggers. But the power sector is at a cusp of a big change, where traditional power-producing may go out of business due to traction in solar. So choosing the business wisely makes sense. else one can be in value traps.

                                                                 Constituents of BSE Power Index

 Out of all the above stocks, I am Focusing only on two stocks, Viz 1) BHEL and 2) CESC for the reasons below:

  1. I believe Index Underweights which are at deep value has a high probability of becoming multibagger.
  2. Index heavyweights- large caps are not generally the place where I like to have them. You may call it a bias. But sometimes I like to live with my bias until it gets dissolved by itself.
Rationale by which I am selecting wheat out of chaff given below:
  • ABB- large-cap Bias
  • Adani Green- I think it’s a house of cards so staying away
  • Adani Power- Same Like Above
  • Adani Transmission- Same Like Above
  • BHEL- Hugh landbank, Privatisation Candidate, Beatendown, Underowned, Deep Value
  • CESC- Power Transmission and Distribution, Clean Promoters, Deep Value
  • KEC- Don’t know much about it
  • NHPC- Deep Value, but somehow I want to give this a skip
  • NTPC- undervalued, But Not for me, A Slow Mover
  • Power Grid-Similar to Above
  • Siemens India- Great Company, But a Large Cap
  • Tata Power- One of the most efficient, Growth Story, But having missed around 30 odd, It’s a regretful stock, would like to give a miss
  • Thermax- Good Business, but again, as I said, I want to choose beaten down
  • Torrent Power- Would Like to trade here but only for the near term

BHEL and CESC Chartical Assessment

BHEL has given a breakout on weekly charts a Trend Change Upward Breakout pattern, a pattern suggesting that it opens an upside till 104 in 380 Days.
    However, I am not a blind Technicals Follower. BHEL is a Probable divestment candidate for govt. IF not privatization, Many PSUs have huge landbanks. I am of the opinion that 2021-2022 will see the highest level of privatization and I have shared the same on my Twitter handle. Going with that rationale, I will be trading here in BHEL( This is a Momentum Trade for Me) as this is a Hope Stock, I will not  Invest Big Sums Like I did in SAIL. But Surely I will be pyramiding this up based on chart pattern formation in the future.

                                                                                                    CESC

 I may consider CESC  for Investment purposes.

CESC (Calcutta Energy Supply Corporation) Limited is a flagship company of the RP-Sanjiv Goenka Group. It is engaged in electricity distribution with an embedded generation facility, across 567 square kilometers of its licensed area in Kolkata, Howrah, Hooghly, North and South 24 Parganas in West Bengal. CESC supplies safe, cost-effective, and reliable electricity to around 3.3 million customers. It also has a power distribution business in Noida, Rajasthan, and Malegaon, Maharashtra.

Distribution Business

Kolkata – The Company is engaged in the business of distribution of electricity across 567 square kilometers of licensed area in Kolkata and Howrah and in the adjoining areas, West Bengal. It is the sole power distribution licensee in its coverage area in Kolkata and its license is valid till September 2038. It has 33 lakhs, customers, with a peak load of 2,300+ MW.

Looking at the Charts, It’s Quite Clear that this is a laggard. I love to invest in laggards. I Call them KumbhKaran because whenever they rise, they can do big magic. Adani Transmission Company is doing a Sales Comparable to CESC and it is trading at 80 times its Profits, Markets are highly Irrational at times. CESC for me is a Low Risk, high Uncertainty Opportunity. I will be trading here on visible patterns and May Also Invest.


Some Other Interesting Charts

Daawat

Daawat has been Consolidating in a Range for a Long time now, Since August 2020. However Recently Stock Has Moved Up from 52 to 61, With good deliverable Volumes in past 3 Days of Averagely 40% or So, Also Close Above 63.5 Tomorrow Friday 5th March will Confirm Weekly Breakout.
New Zones till 90 Rs gets opened upon a clean Breakout with Volumes. Need to Check Volumes at Day Close Tomorrow.

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The author of the blog Mr.Suyog Dhavan is a Full-time Investor / Value Trader and Value investing/Trading Mentor. His style of Investing is inspired by Mohnish Pabrai, Peter Lynch, and Porinju Veliath. He is the founder of Strategic Alpha Wealth, A Premier stock market mentorship firm with a mission to touch the lives of 1Lakh people through its mentorship program.

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