Research Archives - Page 10 of 10

Narayana Hrudayalaya – 20% Upside?

NH is retracing for a Dip further to extend the bullish rally to the new ATH. The chart structure is a classic example of how stock consolidates and moves out to break and how previous resistance becomes support. After the breakout from a rectangular pattern, the stock rallied towards 1,300 odd levels and, at present, is undergoing a correction, which is forming a flag pattern. The flag is a short-term continuation pattern widely traded and observed by traders and short-term investors. This pattern allows entering an upward-trending stock at a reasonably favourable price with lower risk. The Volumes display classic behavior as they continue to deteriorate throughout the pattern, but a recent surge is seen as we observe a partial fill. A partial fill usually indicates the direction of the eventual breakout. The midterm 50 Days Moving average continues to slope up, indicating the overall trend is positive, while contraction of 20 and 50 MA indicates the stock has strong support in the zone of 1130 – 1150. Lastly, This level coincides with the previous Top of the rectangle pattern at the 1132 level. Hence, the previous resistance acts as a support, an inflection point. All this evidence suggests that short-term to mid-term investors and traders must keep a close watch on NH, which must be on your watchlist. We recommend a Buy on NH at 1180 – 1150 levels for an upside to 1280 and a further 1496 (0.75x of Pole). Stops for this position can be kept at 1120 on a closing basis; hence, the R: R is 2X and is much more favorable in the mid-term. Happy InvestingFinversify

The #Paytm Saga – When Geniuses failed

Research

Paytm, the leading Fintech, has been a case for mass destruction despite as a product; it is no doubt that the Founder of Paytm, Vijay Shekhar Sharma’s view, was ahead of time. But interestingly, the stock has been eye candy for traders and investors who always look to pull the trigger on this stock. Be it short-term trading due to some event or news or long-term investing based on its future growth story as a significant player in the fintech space. It has been a dubious case. Cut to the chase: It is a case study for many and some simple logic (obviously, hindsight bias ). The basic rule/logic or brainstorming- What Happens when the major investor in a Fintech exists just a Year(Trading Days) from the share price listing? The stock was listed on 18 Nov 21, and Softbank trimmed its stake on 11 May 2023. Additionally, Softbank trimmed another 2%, which was completed on 24 January 2024! is just about time. “Are Jab Investor hi sure nahi hai to retail investors ko itna kyu pump kar rahe hai sab Buy karne ke liye??Look at the image below! BoFA, GS etc aur pata nahi kaun kaun! To add insult to injury, Warren Buffet, The Living God of Investing(Omaha) Exited the business with a 600 Cr Loss! Investors should ask – “To Phir, retail kyu buy kar rahe the!? Lastly, Sir Dr A Velumani, who created multi-billion dollar Thyrocare, is also stuck with 1400 Crore and lost. I admire him for his work, but this also shows that even genius failed in this whole saga. Anyhow. The comments from the RBI are serious. It is pretty apparent another major player will soon acquire the company. (Ambani-Adani) Remember – The fine line between short-term trader and long-term investor is – Stoploss.Finversify

Nifty50 Outlook

Research

Nifty – The Upward momentum intact unless.. let’s be straight and come to the facts. 1 – Nifty has strong support at 22200. This is the previous all-time high, The Support trendline drawn from lows of 24-1-24 coincides with this level too. 2 – RSI divergence is quite obvious but this is a case of classic double divergence. Keep an Eye if RSI breaks the level of 50. 3 – ADX Well below 15 mark shows a sluggish sideways market, hence anyone ( the bull or bear) can capitalize on this. Though in an uptrend “Unless” the 22200 is taken out, it should be bulls.4 -Market breadth looks weak, not just deteriorating, cause the % of Stocks above key short and mid-term MA looks sliding down. Not a good sight in a bull market. We believe these levers are important and just by following this, we can at least understand if the market is going to continue to move upwards or if we are in for a short break. #stockmarketsindia, #nifty50, #stockmarketcrash Research DeskFinversify

CNXSMALLCAP & MIDCAP – Chart Analysis

Research

So it all boils down to simple method for trend identification. A bullish rally setup which has been making higher high and higher lows has breached its previous higher low indicating we are in for some sideways to corrective phase. A new lower low indicate impending correction, but, till what levels? Another approach in technical analysis teaches us – “previous resistance become support and support become resistance”. Going forward, CNXSMALLCAP may correct towards lower levels of 13000 – 12100, which is a12-19% correction. It is located at its ATH of 2023 – 2022. We can see similar setup in CNXMIDCAP but below 12%, pain is much higher in terms of price. All we can be is to stay cautious. Be very selective in approaching stocks as they will move and rally but not in a frenzy which we have seen in past few months. Research DeskFinversify

Why Hasn’t MRF Split Its Stock Like Nestle India? A Deep Dive

Blogs, Research

On January 5, 2024, Nestle India announced a stock split in the ratio of 1:10. This meant that each share, previously priced at an astonishing ₹27,000, was converted into ten shares of ₹2,700 each. As a result, Nestle’s stock became more accessible to retail investors, increasing liquidity and potentially making the stock more attractive to a broader range of market participants. Stock splits are often undertaken to enhance liquidity by making shares more affordable, encouraging greater participation from investors, and ensuring efficient price discovery. Naturally, this raises an important question—why hasn’t MRF, one of India’s highest-priced stocks, considered a stock split? MRF’s stock is currently trading at around ₹1.3 lakh per share, making it out of reach for most retail investors. If MRF were to consider a split, what would be the possible scenarios? More importantly, does the company have any incentive to do so? Stock splits are generally announced in common ratios like 1:5, 1:10, or 1:20. Given MRF’s extremely high share price, it would require a significant split to make the stock more affordable. Currently, MRF’s share has a face value of ₹10. A 1:20 split would bring the face value down to ₹0.5, but since the face value cannot go below ₹1, this scenario is not feasible. A 1:10 split, however, would reduce the face value to ₹1, which is acceptable. This would bring the stock’s market price down to approximately ₹13,000 per share. However, this is still a high price for most retail investors. In many cases, stock splits lead to a rally in share prices due to increased demand, so the post-split price could be even higher than ₹13,000. Therefore, even after a 1:10 split, MRF shares would remain expensive, defeating the primary purpose of making the stock more accessible. Instead of a split, MRF could consider a bonus issue, where existing shareholders receive additional shares at no extra cost. For example, if MRF announced a 19:1 bonus issue, meaning shareholders would receive 19 additional shares for every share held, the equity share capital would increase from ₹4.2 crore to ₹84.8 crore. MRF has ample free reserves to support this, and such a move would divide the stock price by 20, bringing it down to ₹5,500 per share. While this is an improvement, it is still on the higher side for most retail investors. To make MRF shares truly affordable, an even bigger dilution would be required—perhaps a 1:39 or 1:49 bonus, which would mean issuing 40 or 50 shares for every existing share held. However, such a large-scale dilution is unprecedented in Indian markets. This brings us to the crucial question: Why hasn’t MRF already taken this step? One of the primary reasons companies opt for stock splits or bonus issues is to increase trading liquidity. More outstanding shares at a lower price attract a wider investor base, increasing trading activity and making price movements more efficient. But what if MRF doesn’t want its shares to be highly liquid? It is possible that MRF prefers a smaller base of serious long-term investors rather than attracting short-term traders. With a high price point, only well-capitalized investors are able to buy the stock, reducing speculative trading and ensuring that the stock’s market value remains closer to its intrinsic business value. A similar approach was taken by Warren Buffett with Berkshire Hathaway. Berkshire Hathaway’s Class A shares currently trade at approximately $550,000 (~₹5 crore) per share, making them one of the most expensive stocks in the world. There have been persistent calls for a Berkshire stock split since the 1990s, when its per-share price first crossed $10,000. However, Warren Buffett has deliberately resisted splitting the stock to discourage speculative trading and attract only serious long-term investors. In the mid-1990s, a new problem emerged in the U.S. market—certain unit trust funds started mimicking Berkshire’s portfolio. Some of these funds only held Berkshire Hathaway stock and sold their own units against it. This led investors to believe that they were essentially investing in Berkshire at a more affordable price. Buffett knew that simply copying a portfolio does not result in similar performance. To counter this, Berkshire introduced a newer, lower-priced share class—Class B shares—which initially carried 1/30th of the voting rights of Class A shares. These Class B shares have since been split further, but Class A shares have never been split. Could MRF find itself in a similar situation? If an investment fund were to emerge that only buys MRF shares and sells its own units against it, retail investors could indirectly gain access to MRF stock without requiring a stock split. This would be similar to what happened with Berkshire Hathaway’s unit trust funds in the 1990s. If such a fund were to gain traction, MRF might consider introducing a lower-priced share class, similar to Berkshire’s Class B shares, rather than undertaking a stock split. But as of now, MRF has shown no indication that it plans to take any such step. While a stock split or bonus issue could make MRF shares more accessible and increase liquidity, the company does not seem to be in favor of such a move. Possible reasons include: Unless MRF sees a clear benefit in making its stock more affordable, it is unlikely to announce a stock split or bonus issue anytime soon. However, if a fund were to emerge that exclusively holds MRF shares, it could force the company to reconsider its stance—just as Berkshire Hathaway did in the 1990s. Until then, MRF will likely remain one of India’s most exclusive stocks, accessible only to a select group of well-capitalized investors.

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