ACC came out with very disappointing set of numbers on July 17th 2015. Net profit of ACC declined 45.48% in the quarter ended June 2015 with 1.5% decline in sales. The stock reacted with disappointment and this is how it appears on the daily chart as of today
ACC Daily Chart
Bulls will like to see the above chart as Stock standing at firm support of 1350-1370. Bears will draw some Head and Shoulder pattern. But what's the Fact:
- The stock has consistently found support at 1350-1370 since October 2014.
- There are no fundamental drivers to support the stock as of now.
The whole premise has been that things are bad but future is bright and things will pick up and hence any selling here does not make any sense. The major issue: stock is already trading at expensive valuations and earnings not picking up. Even if one makes a case for support here: nobody can argue for rally. ACC stock is in real tough spot and even if stock finds taker here: upside seems capped for now. A breakdown below 1350-1370 might attract some short selling but that too remains a risky bet in overall market environment which is optimistic.
A safer strategy looks Avoid now.
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Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers