Technical Analysis of Indian Equities by Nooresh

How to avoid risky companies that can fall 80% !!

One of the biggest problems for Indian equity investors is that there are 10 wealth destroying listed stocks for every one wealth creating stock.

Some of these destroyers end up going down 80-100% and is a total capital loss. The capital loss is permanent and forever in many of these companies.

There are various sites where one can scan for low delivery percentages. ( Google )

A step by step process to scan !

  • The most reliable place would be to pull the end of day sheet from www.nseindia.com from this link - https://www.nseindia.com/archives/equities/mto/MTO_22042019.DAT
  • Apart from that for every stock one can see delivery percentages in a good format on www.moneycontrol.com or a much longer data on https://www.nseindia.com/products/content/equities/equities/eq_security.htm 
  • Once this is done one can check for companies with less than 20% delivery volumes.
  • For a lot of large cap companies in derivatives, heavily traded counters will have low delivery volumes. Also on certain days of results, sharp up or down moves it will be low delivery percentage.
  • The risky part is when a stock continues to trade at 5-15% delivery volumes for long period of time. It generally stinks of something not right.
  • There are quite a few which do have very delivery volumes in the current market. I would prefer not to name them but there is a SME , a NBFC at 52 week highs and a couple of names where a known Insurance company has stakes.  Writing negative can be risky and even if one is right can take a long time to be proven so would prefer people do the check themselves.

For example I wrote about Vakrangee in 2015 on the delivery volumes. It went up 10x and is still higher than the price then !! Kept warning on the same in 2017-2018

But a couple of examples will tell you why it should be looked into.

1) Bhushan Steel

Low Delivery Volumes back in 2013 - http://www.nooreshtech.co.in/2013/09/bhushan-steel-surprising-data-low-delivery-volumes-but-range-bound-prices.html 

2) Videocon Industries –

Almost same price with low delivery volumes - https://twitter.com/nooreshtech/statuses/861597190380175360?tw_i=861597190380175360&tw_e=permalink&tw_p=archive 

3) Infibeam

Price rallied with 5-15% volumes and ended up getting included even in Futures !

4) Religare Enterprises

Was once a Banking Contender 

Tweet 1  Tweet 2  Tweet 3 

4) Many more examples   ( Click to go to the tweets ) =   Lambodhara Textiles , Atlas Cycles , Compuage Infocom , Sharon Bio,  Mandhana Industries, Era Construction.

 

If you notice most of these companies have fallen 80-90 % from the top.

As a simple Rule One should avoid any company which has less than 20% delivery volumes for few weeks.

 

 

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Article by Nooresh Merani

Nooresh has written 2755 articles.

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