Why I am bullish on Airtel - Macro trend analysis
This is a long-term analysis for the telecommunications giant - Bharti Airtel.
There are two primary market trends in the broad perspective :
1. Uptrend/downtrend
2. Accumulation/ Distribution.
The accumulation phase is the boring phase, when smart investors accumulate positions and get in early. the uptrend/mark-up phase is the euphoria phase when the retail market participation increases, indicated by surge in volume, and smart investors slowly start unloading their positions, until the uptrend momentum has subsided, followed by a new accumulation phase and another possible mark-up, or a distribution phase followed by a downtrend, which is also known as a bear market. Till the time price has moved away from the range it has been trading in, we do not know whether the range is accumulative or distributive in nature.
As you can see in the chart, Bharti Airtel has been in an accumulation range for more than 10 years, and it seems as though we have finally successfully managed to break away from the range to the upside. The longer a stock has been in accumulation, the stronger the momentum once price breaks away from the range.
Let us see a stock that has done something similar. It is none other than, Reliance Industries.
You can clearly see how quickly the trend progressed after leaving the accumulation range.
Key takeaway points from the analysis and comparison
1. Airtel has been range bound for a longer period of time as compared to Reliance. This implies that Airtel has spent more time in the accumulation phase.
2. Airtel broke out of the range in early 2020, but threatened to fall back into the range, only to deviate back above and hold the range-high as support for several months. Deviation and reclaim as support is considered a strong bullish sign, indicating that buyers are stepping in to defend the range high as support.
3. Reliance never back-tested its range high as support before its second mark-up phase. Airtel back-testing range high as support is giving buyers more confidence that the stock is ready for price-discovery mode.
4. Volume analysis - Airtel has a better volume profile, with depleting low volume during accumulation phase and a surge in volume upon breakout attempt, and is showing continued volume strength. This setup was not seen in Reliance.
Conclusion
With this we can conclude that Airtel is giving us a nice bullish setup for a long term trend change shift and tackling new all time highs. The Indian stock market has been in a bull run ever since the year 2000, with corrections along the way (two major corrections in 2008 and 2020). As long as this macro bullish structure of the Indian market continues, we can expect Bharti Airtel to perform strongly in the coming years and have a similar run up as compared to Reliance Industries.
Thank you. Do leave a like/comment if you enjoyed the analysis.
Note: This is not financial advise. It is for educational/entertainment purposes only
There are two primary market trends in the broad perspective :
1. Uptrend/downtrend
2. Accumulation/ Distribution.
The accumulation phase is the boring phase, when smart investors accumulate positions and get in early. the uptrend/mark-up phase is the euphoria phase when the retail market participation increases, indicated by surge in volume, and smart investors slowly start unloading their positions, until the uptrend momentum has subsided, followed by a new accumulation phase and another possible mark-up, or a distribution phase followed by a downtrend, which is also known as a bear market. Till the time price has moved away from the range it has been trading in, we do not know whether the range is accumulative or distributive in nature.
As you can see in the chart, Bharti Airtel has been in an accumulation range for more than 10 years, and it seems as though we have finally successfully managed to break away from the range to the upside. The longer a stock has been in accumulation, the stronger the momentum once price breaks away from the range.
Let us see a stock that has done something similar. It is none other than, Reliance Industries.
You can clearly see how quickly the trend progressed after leaving the accumulation range.
Key takeaway points from the analysis and comparison
1. Airtel has been range bound for a longer period of time as compared to Reliance. This implies that Airtel has spent more time in the accumulation phase.
2. Airtel broke out of the range in early 2020, but threatened to fall back into the range, only to deviate back above and hold the range-high as support for several months. Deviation and reclaim as support is considered a strong bullish sign, indicating that buyers are stepping in to defend the range high as support.
3. Reliance never back-tested its range high as support before its second mark-up phase. Airtel back-testing range high as support is giving buyers more confidence that the stock is ready for price-discovery mode.
4. Volume analysis - Airtel has a better volume profile, with depleting low volume during accumulation phase and a surge in volume upon breakout attempt, and is showing continued volume strength. This setup was not seen in Reliance.
Conclusion
With this we can conclude that Airtel is giving us a nice bullish setup for a long term trend change shift and tackling new all time highs. The Indian stock market has been in a bull run ever since the year 2000, with corrections along the way (two major corrections in 2008 and 2020). As long as this macro bullish structure of the Indian market continues, we can expect Bharti Airtel to perform strongly in the coming years and have a similar run up as compared to Reliance Industries.
Thank you. Do leave a like/comment if you enjoyed the analysis.
Note: This is not financial advise. It is for educational/entertainment purposes only
