The stocks offer lots of opportunities on a regular basis but it is always upon us how we view and trade them.
Let us take the case study of HDFC
Every stock has its own character and strength. HDFC has always been a bullish leveraged play on Nifty. It means if you are bullish on Nifty, buy HDFC and you will be rewarded much higher than what Nifty will deliver.
HDFC Bullish run between 2014 and 2016
Source: Chartalert.com
Nifty saw a big bullish run between 2014 and Feb 2015 when it broke out above 6000 levels and rallied to 9000 levels. HDFC stock did the same and rallied 86% from 750 levels to 1400. Nifty created a new line of resistance around 9000 and HDFC stock did the same with resistance around 1400 levels. HDFC followed Nifty like 1:1 and never crossed its previous high decisively till Nifty did the same in Feb-March 2017
Source: Chartalert.com
The major buy signal came when HDFC made a large candle move in Jan 2017. That Large candle move resulted in 40% rally in HDFC over the following 12 months. It coincided with short term peak in Nifty in Jan 2018.
Chaos in Nifty and HDFC becoming Buy Low Sell High kind of play
Nifty has been all over the place since early 2018 and so has been the HDFC stock. The only good news for HDFC has been the way it found support at lower levels
Source: Chartalert.com
This is what HDFC stock has done over the last 12 months +42% rally between Nov 2018 and June 2019
How should one invest/trade HDFC right now?
Answer: Avoid for now. HDFC is a buy only after deep decline
Just like Nifty has a base around 10000 levels, HDFC stock has Ultimate support levels around 1650. The upside momentum does not exist anymore and it seems like Nifty might trade sideways for quite some time and it means HDFC might once again dip near 1650 to become attractive again. Till that point, there is nothing to get excited about this stock for now
The article has been written purely for educational purposes