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DCM Shriram Limited

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DCMSHRIRAM trade ideas

DCMSHRIRAM Found support at 50% fib levels closed above monthly support line (pink) chikou above cloud closed above tenkan and tested kijun long to fib levels above 401 odd levels short below 380 to fib levels BUY BACK OF SHARES : Boost in Share Prices When the economy is faltering, share prices can plummet as a result of weaker than expected earnings among other factors. In this event, a company will pursue a buyback program since it believes that company shares are undervalued. Companies will choose to repurchase shares and then resell them in the open market once the price increase to accurately reflect the value of the company. When earnings per share increases, the market will perceive this positively and share prices will increase after buybacks are announced. This often comes down to simple supply and demand. When there is a less available supply of shares, then an upward demand will boost share prices. Tax Benefits When excess cash is used to repurchase company stock, instead of increasing dividend payments, shareholders have the opportunity to defer capital gains if share prices increase. Traditionally, buybacks are taxed at a capital gains tax rate, whereas dividends are subject to ordinary income tax. If the stock has been held for more than one year, the gains would be subject to a lower capital gains rate. Excess Cash When companies pursue buyback programs, this demonstrates to investors that the company has additional cash on hand. If a company has excess cash, then at worst the investors do not need to worry about cash flow problems. More importantly, it signals to investors that the company feels cash is better used to reimburse shareholders than reinvest alternative assets. In essence, this supports the price of the stock and provides long-term security for investors. The Downside While investors tend to adore buybacks, there are several disadvantages investors should be aware of. Buybacks can be a signal of the marketing topping out; many companies will repurchase stocks to artificially boost share prices. Typically, executive compensations are tied to earnings metrics, and if earnings cannot be increased, buybacks can superficially boost earnings. Also, when buybacks are announced, any share price increase will typically benefit short-term investors rather than investors seeking long-term value. This creates a false signal to the market that earnings are improving due to organic growth and ultimately ends up hurting value. The Bottom Line Generally speaking, redistributing wealth has been viewed positively by investors. This can come in the form of dividends, retained earnings, and the popular buyback strategy. In terms of finance, buybacks can boost shareholder value and share prices while also creating a tax-advantageous opportunity for investors. While buybacks are important to financial stability, a company’s fundamentals and historical track record are more important to long-term value creation. credits: investopedia
NSE:DCMSHRIRAMLong
by avito123
understanding cup&handle pattern : types of pattern 1cup and handle pattern- The Cup with Handle is a bullish continuation chart pattern that marks a consolidation period followed by a breakout.It was developed by William O'Neil and introduced in his 1988 book, How to Make Money in Stocks. cup with handle is a chart pattern that has a well defined horizontal boundaries breakouts from chart pattern with horizontal boundaries are usually strong and reliable. As its name implies, there are two parts to the pattern: the cup and the handle. The cup forms after an advance and looks like a bowl or rounding bottom. As the cup is completed, a trading range develops on the right hand side and the handle is formed. A subsequent breakout from the handle's trading range signals a continuation of the prior advance. edwards and magee in their technical analysis book said that a stock should breakout by 3% margin from the resistance level for a proper breakout. please note that this is a trading tactic edwards and magee discussed in their book. each trader or investor can implement their own trading tactic to enter size take profit and exit from different chart pattern breakout opportunity , its not any rule. stocks which completed target as per cup and handle pattern- 1. ceat 2. dcb 3. federal bank and many more.. will be covering more on probable breakouts and those are moving towards their targets.
NSE:DCMSHRIRAMEducation
by kacharts
10