TCS: Has it bottomed out? Is it on the verge of bottoming out?
Updated
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(1) Price and strength of rally: Today, TCS though has declined , strength of decline has weakened. This is demonstrated in the net change in closing price. Previous close was at 1658. Today, closing price is 1654.
(2) RSI: Let us sift price drops and corresponding RSI at the bottoming out. Historically, TCS has witnessed much higher RSI at bottom out than now. Thus, price in the context of RSI appears in an oversold zone.
(3) Delivery volume% (available on NSE) has remained steady at 60+ %. This implies 60 out of 100 traders have chosen to become investors, take deliveries. Today's delivery % is on the higher side compared to 10 days average delivery %
(4) Traded volume is also on the higher side
(5) Option series for 26th March expiry reveals that the maximum change in Put OI at 1500PE & 1600PE. Option premiums have declined. 6 days to expiry are left. So time decay or Theta will progressively overpower. Therefore decline in premium will be sharper. However, this is only possible when the underlying price goes. Today, there are no significant Put unwinding.
(1) Price and strength of rally: Today, TCS though has declined , strength of decline has weakened. This is demonstrated in the net change in closing price. Previous close was at 1658. Today, closing price is 1654.
(2) RSI: Let us sift price drops and corresponding RSI at the bottoming out. Historically, TCS has witnessed much higher RSI at bottom out than now. Thus, price in the context of RSI appears in an oversold zone.
(3) Delivery volume% (available on NSE) has remained steady at 60+ %. This implies 60 out of 100 traders have chosen to become investors, take deliveries. Today's delivery % is on the higher side compared to 10 days average delivery %
(4) Traded volume is also on the higher side
(5) Option series for 26th March expiry reveals that the maximum change in Put OI at 1500PE & 1600PE. Option premiums have declined. 6 days to expiry are left. So time decay or Theta will progressively overpower. Therefore decline in premium will be sharper. However, this is only possible when the underlying price goes. Today, there are no significant Put unwinding.
Note
Record date for claiming interim dividend of Rs.12 per share is as of today. Since 2nd March we have noticed gradual pick up in trading volume and delivery %. Thus, one may say that key assumptions stated have realized the upward price movement. However, it is difficult to differentiate between price movement triggered due to overselling in the past and an interim dividend. Overall, trade set up has worked well
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