Coal India stock has seen a big decline in last few months. How Big - well see for yourself in the daily chart below
The stock is down 25% in last 6 weeks. That's a HUUGe downmove for a large stock.
The big question: Has stock become attractive after this huge decline. Is there any margin of safety now?
Well - Here's the Weekly chart
Over a longer term horizon on weekly chart - Coal India stock has come down to important weekly support of 330 - the level which has acted as support since May 2014. The stock has taken support at 330 and looking at the big picture - the odds are in favor of support at current levels. A small bounce to 370-385 cannot be ruled out over next few months. It also needs to be seen - Can this level become long term bottom for the stock?
A decline below 320 would result in stop loss and stock will be up for technical re-evaluation on what it wants to do next
What is margin of safety?
I have explained this concept here in Youtube with example of Bharti at 340. Bharti has bounced now to 360.
1. 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.
2. I am not a registered investment advisor. My views are strictly based on my understanding of chart. Please always do your own due diligence before making any investment/trade.