Stocks of the sector move together.
Here's an excellent example of the above. Just look at the daily chart of three FMCG companies -
1. Dabur at 200 dma
Dabur has been in excellent Bull market since March 2012 and has always traded above 200 dma since then. Can it hold and survive again?
2. Marico at 200 dma
Marico too has been in strong Bull market since Sep 2009 when it broke out above 85.
3. Emami at 200 dma
Emami broke out above 411 in May 2013 and in last two years - the stock has moved up almost 3x. The stock is now down to 200 dma
All the above stocks are in strong Bull market. All the above have pulled back to 200 dma which in ordinary circumstance means BUY but considering that market right now is chasing new ideas...it would be interesting to see how market reacts to current pullback in these names. Ignore can lead to underperformance but you never know
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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