Amara Raja Batteries - Target 1110 Upside 60%
Stock seems to have entered minor wave 3 of the third intermediate of fifth primary. Stock took long time consolidating in wave 4 from 2015 to 2020 which marked the end of a double correction. The next upswing that started from 23 march 2020 (post corona) could either be X - paving way for triple correction or wave 1 of primary fifth. Both the interpretations are convincing. The upswing that ended in the week of 3rd July, should have been a 3 wave structure, if triple correction was underway. Moreover, the goal of fourth primary was attained far more than what was adequate and the stock lingered sideways. I am convinced that the wave that ended in week of 3 July 23 was an impulse, and should have retraced to 535, but the previous primary 4 which overarched itself, its 50% level prevented decline. Its primary 3 was highly exaggerated and therefore primary 4 took a very long time. Current wave, being termed as minor 3, may, if it proves to be triple correction, most likely be a flat or triangle in tight range bound movement as retracement targets have been met with spillover and the only target left is to do some more time-pass before marching on next journey. I am opening longs with target of 1,110 suggesting an upside of 60%. This is the target of cycle three and reasonably estimated primary 5 too. Since its a huge upside, the stop loss levels are deep, which I am willing to face as I believe in the fundamental story and future growth from Li-ion batteries project. What impresses me further is that in past 5 years it has invested nearly INR 3000 crores all from cash flows, despite paying back to lenders. Virtually a debt free company, second in market size, better in profitability, growth and valuations than Exide, low beta of approx. 0.6, the company is a nugget of gold in the portfolio - and - available at mouth watering valuation. Its peer, Exide, the market leader is twice as costly and has higher unlevered beta. Since wave theory itself is giving me enough confidence, am not spending any energy on alternative confirmation from deep technical analysis, though top 10 indicators support the view.
Basis swing theory, it has touched the reactive 50% level and the stock may face some turbulence there, if it falls down, it may not fall much for lack of any targets to be achieved.
Disclaimer : The contents herein are my personal views, for me to make an investment decision, shared here with an objective of seeking views and comments from traders community at trading view platform. Nothing contained herein should be construed as an advice, offer, inducement or encouragement to buy or sell any shares, security, derivatives linked to the security, debt security or any other security of the company mentioned herein. The readers must make their own independent assessment, evaluation and valuation of the company and/or any of the securities issued by it or referenced to it. The reader is advised to take advice from their professional financial advisors before entering into any transaction or making a financial decision, without relying on anything contained hereinabove, or views given as addendum or comments hereafter. The author shall not be responsible or liable, directly or indirectly, for any loss or damage, including loss of profits, caused to the reader, or any other person or third party, whether pecuniary or otherwise, whether in present or in future, whether incurred or probable. Any replication of the contents herein is strictly prohibited except with the prior written consent of the author.
Basis swing theory, it has touched the reactive 50% level and the stock may face some turbulence there, if it falls down, it may not fall much for lack of any targets to be achieved.
Disclaimer : The contents herein are my personal views, for me to make an investment decision, shared here with an objective of seeking views and comments from traders community at trading view platform. Nothing contained herein should be construed as an advice, offer, inducement or encouragement to buy or sell any shares, security, derivatives linked to the security, debt security or any other security of the company mentioned herein. The readers must make their own independent assessment, evaluation and valuation of the company and/or any of the securities issued by it or referenced to it. The reader is advised to take advice from their professional financial advisors before entering into any transaction or making a financial decision, without relying on anything contained hereinabove, or views given as addendum or comments hereafter. The author shall not be responsible or liable, directly or indirectly, for any loss or damage, including loss of profits, caused to the reader, or any other person or third party, whether pecuniary or otherwise, whether in present or in future, whether incurred or probable. Any replication of the contents herein is strictly prohibited except with the prior written consent of the author.
Trade active:
A perfect textbook triangle is forming in minutte wave (iv) of minor 3, post this minute (v) should occur, with swift thrust upwards to mark completion of minor 3. ABCDE has formed, probably is forming ABCDEFGHI (triangle within triangle). Am not aware much of technical patterns, but looks like a flag and pole in that language.
Trade active:
Minute wave 4 target almost achieved (miss by around INR 3) on market open. The advancing wave should be impulse minute (v) and provides good entry point.
Trade active:
It appears that the minor wave 3 was completed on 11-Mar-24 and stock has now entered wave 4 which is expected to last for a month, during which period it should remain sideways. Good strategy seems to be shorting a naked straddle, without hedging, hedging only when entire premium received is eroded. This is a very high risk strategy and very adept hands will be required to monitor delta, gamma and vega. Expecting an upward momentum after a month.
Trade closed: target reached:
Current trade setup exited