Hi All,
I am sure that all of you might be aware about what happened with Punjab National Bank. Flamboyant diamond and jewellery merchant Nirav Modi, with the help of some corrupt bank officials, used fake LoUs to defraud the bank to the quantum of close to Rs.11,400 crores. Enough of the story is available on the internet, and I am sure you would be aware about it thanks to the media, the social media and What's App forwards.
This post is meant for something else though...
All those familiar with Technicals know that "PRICE Discounts Everything", i.e. everything is visible on price it self, and that to, many times well in advance.
And this so called PNB scam confirms this tenant once again. Those aware about some basic Technical Analysis methods, would have been able to predict, if not a scam per say, but a steep price fall, at least till 130 levels.
Got this information on What's App, rechecked at my end, below is an image showing how charts have already hinted a fall in the prices before the news actually came out.
The chart was very clear about something is cooking for short term and as a result of that a fall from 200 to at least 130 levels could have been expected in January, well in advance before the actual even of fraud was made public....
- Prices were rising from November, with thinner volumes
- Also, price rise was not accompanied by rise in OI, which suggest fresh long positions were not getting built up
- On 24 and 25 January, Nifty, on daily charts gave a Bearish Engulfing Pattern, which is a strong bearish reversal candlestick formation
I very well know that this is kind of post mortem, but the point I want to make here is that there are ways by which you can analyze a stock price, only thing is you should know how....
I am sure, you all are getting regular market updates, and fortunately Nifty is behaving in the same manner as per our Technical Analysis / chart discussion, hope you all able to en-cash this down move which started after Nifty broke crucial levels of 10900-800 ...
Before we end the week, here is my personal view on PNB . . .
The stock has been hammered from 200 levels to almost 120 levels, which is a massive fall of 35 to 40%. The next support area for PNB is near 110 (daily bottom) and 100 levels (78.6% retracement).
After such a huge fall and given the fact that daily chart today ended up giving a Doji candle, which shows indecisiveness, if and only if prices cross and sustain above 129-131 levels, a small pull back can be expected with higher targets near 139-142, however post that it is expected to come down and if breaks 120 then, can fall down to 110 or 100.
So, risky traders out there can take positions according to the aforesaid levels...
For investors, I may not be the best person to comment on the fundamentals, just thought of sharing a news I heard that LIC issues a statement that they still believe in the company and not going to sell their current holdings at a loss. Also, being a government undertaking, it is unlikely that this scam will replicate the results which happened in the case of Satyam Computers or Bhushan Steel earliar...
If you are convinced woth the fundamentals, I feel good time to accumulate 25% of your total investment kept aside for this stock and then enter later, if it comes down
Cheers ! ! !
Hrishi
