If you don’t know, Hindalco is a leader in Aluminium and Copper. It is one of the prominent Indian companies, when it comes to minerals. It also has its place in the NIFTY 50, and hence constitutes towards the movement of Nifty.
Today, I am going to talk about a technical trade, that we took on Hindalco in the last week and achieved phenomenal returns in a matter of 4 days. Before going into, how did I do it, let me explain about Technical analysis. The analysis of charts (Price – Time) for a stock is called technical analysis. The concept of this analysis revolves around the fact that history repeats itself. If a particular script had behaved in a certain fashion under certain circumstances, and if those circumstances came again, there is a good probability that the script shall behave similarly. There are many different chart types, chart time frames, overlays and indicators which are used in this field. I will not spend time in explaining those and shall keep it for some other time.
Let us look at this chart
The chart shown above is a candle stick chart. As you can see, based on the setup that we were expecting, on 28th Feb, we bought this script at Rs. 182 and on 3rd March, we sold it for Rs. 198. That is a profit of about 9% in a matter of 4 days. While, there could be a decent upside remaining in this stock, it is best for us to book our profits and come out of the trade.
Let me explain as to why we do that. While fundamentals and technical analysis are important, the most important aspect of stock markets is money management. One should know as to when to book the profits and also when to book the losses.
However, one thing is clear after taking such trades, that in today’s financial world where FDs are giving only 5 – 7% returns, people need to start looking at alternate avenues of investing.
I have decided to write regularly and hence keeping it short. If you have any questions regarding this trade or for that matter any stock that you would like an opinion on, feel free to ask and I or someone from my team will be more than happy to respond.