Investing in small companies is considered quite risky, but often, these risks turn into incredible profits. Prime Industries is one such company that has transformed its investors into crorepatis with just a modest investment over the past 5 years.
The Multi-fold Growth
- Stock Performance: As of September 15, Prime Industries’ shares were priced at ₹146.40 on BSE, marking a growth of 4.98%. About five years ago, these shares were available at just ₹0.60. This means the shares have provided returns of approximately 24,300% in this period.
- Investment Growth: If an investor had put ₹1 lakh in this stock five years ago and held onto it, the value of that investment would have shot up to ₹2.43 crores now.
- Recent Performance: The recent performance of Prime Industries’ shares has been robust. Over the past year, it has delivered a return of 7.92%. The stock price has surged by 1,584.70% in the last six months, and in the past year, it has offered its investors a whopping 1,991.43% multi-bagger return.
About the Company
- Business: Prime Industries Limited is engaged in the business of producing and selling ‘vegetable oils’. The company also produces vegetable oils for bakeries and enjoys a strong presence in its segment. In addition, the company manufactures and sells various refined oils, including sunflower oil.
- Current Market Capitalization: The current market cap of Prime Industries is ₹229.17 crores.
IPO Watch: Upcoming IPOs in India
Highlights:
- India’s primary market is buzzing with activity, with multiple companies continuously launching their IPOs.
- Next week will witness the opening of subscriptions for IPOs of three mainboard companies.
- These companies collectively aim to raise ₹2,201 crores through their IPOs.
- The companies include SAMHI Hotels, Jungle Prepaid, and Yatra Online.
Upcoming IPO Details
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Sai Silks:
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- Ethnic clothing company, Sai Silks, will open its IPO subscription on 20th September and will be available for subscription until 22nd September.
- The company has set a price band of ₹210-222 per share for its IPO.
- The lot size for this IPO has been determined as 67 shares.
- Motilal Oswal Investment Advisors, HDFC Bank, and Nuwama Health Management are the book running lead managers for this issue.
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Signature Global:
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- Real estate company, Signature Global, will open its ₹730 crores IPO on 20th September and it will run until 22nd September.
- The company originally planned for a ₹1000 crores IPO but later reduced the size to ₹730 crores.
- The price band for the Signature Global IPO has been set at ₹366-385 per share.
- The lot size for this IPO is 38 shares.
- Share allotment could be completed by 27th September, and successful bidders might see the shares credited to their demat accounts by 3rd October. The expected listing date is 4th October, 2023.
3. Vaibhav Jewellers:
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- Vaibhav Jewellers will be open for IPO subscription between 22nd-26th September.
- The company is aiming to raise ₹270 crores through the IPO.
- The price band for the IPO is set between ₹204-215 per share.
- Investors can bid for a minimum of 69 shares.
- 50% of the shares under this IPO are reserved for Qualified Institutional Buyers (QIB), 15% for Non-Institutional Investors (NII), and 35% for retail investors.
- The shares’ allotment process is expected to be completed by 3rd October 2023. Successful bidders might see the shares credited by 5th October 2023, with a probable listing date of 6th October 2023.
- Vaibhav Jewellers was one of the first to venture into organized jewelry retail in Andhra Pradesh. 77% of its showrooms are located in Tier-2 and Tier-3 cities, with the remaining in urban areas like Hyderabad and Vishakhapatnam, catering to urban consumers.
Understanding Technical Analysis in Stock Trading
Introduction: When considering investments, most people initially think of a company’s sales, earnings, or balance sheet to evaluate its worth. This approach is based on fundamental analysis. But there’s another angle we can look at: Technical Analysis.
What is Technical Analysis?
Technical analysis is the process of predicting future stock prices based on historical data. You might have heard the saying, “history repeats itself.” Technical analysis essentially works on this principle. It uses past stock price and volume data to forecast future movements.
Features of Technical Analysis:
- Relates to a stock’s past prices and volumes.
- Uses various stock market charts, technical indicators, and other techniques to predict future price movements.
Why Should Traders Learn Technical Analysis?
Technical analysis isn’t just applicable to stocks. It can be used for all kinds of tradable instruments like commodities, currencies, derivatives, and more. It provides traders with tools to analyze any stock or index and understand market trends.
Types of Technical Analysis
- Top-Down Approach: Investors first look at the economy, then analyze the sector, and finally evaluate stocks in that sector using technical analysis. In simpler terms, these analysts first look at macroeconomic factors, then the overall economy, followed by the specific sector, and lastly the individual stock.
- Bottom-Up Approach: This approach is about individual stocks. Traders or investors identify shares that show potential growth in the future. They use technical tools to pinpoint entry and exit points in a stock.
How Does Technical Analysis Work?
Charles Dow, the creator of the Dow Jones Industrial Average and the founder of the Wall Street Journal, introduced the idea of technical analysis in the late 1800s. His perspectives on stock price patterns became known as the Dow Theory.
The underlying belief in technical analysis is that all information about a stock is reflected in its price and that historical price behaviors will likely repeat in patterns. While interpretations can vary among analysts, understanding and expertise are essential for accurate predictions.
Understanding Technical Analysis Charts for Stock Trading
Technical analysis charts are crucial tools for traders to understand stock trends and make informed decisions. Let’s dive deeper into the types of charts and how they assist traders.
1. Line Charts
- A basic chart pattern that showcases the stock’s price in a single line.
- Represents closing prices of a stock or index.
- While other prices, like opening, high, or low can be plotted, the closing price gives the most accurate predictions.
- Useful for beginners to grasp the general price movement but doesn’t offer deep insights into price actions.
2. Bar Charts
- Popular among traders and offers a comprehensive look at stock prices.
- Displays opening price, high, low, and closing price.
- Consists of vertical lines, with the top indicating the highest price and the bottom showcasing the lowest.
- Uses different colors to represent price differences, making it easy for traders to track and predict price movements.
3. Candlestick Charts
- Widely used due to its simplicity and advanced features.
- Shaped like candles, with a body and lines (or “wicks”) extending above and below.
- Upper wick shows the highest price, while the lower indicates the lowest.
- The candle’s body reveals the difference between opening and closing prices: a green body for price increases and a red one for decreases.
- Highly recommended for new traders to master this chart type, as its understanding eliminates the need to learn other charts in depth.
4. Renko Charts
- Unique as it only focuses on price movement and not time or volume.
- Uses “bricks” colored in red/black for price decline and white/green for price increase.
- A new brick forms when the price moves beyond a set amount.
- Useful in identifying support and resistance levels, but challenging to gauge market sentiment.
5. Heikin Ashi Charts
- An advanced form of candlestick charts originating from Japan.
- Unlike candlestick charts which use exact opening and closing prices, Heikin Ashi uses average prices.
- Offers a clearer understanding of uptrends and downtrends.
- Continual green candles without lower wicks indicate a strong uptrend, while continual red candles without upper wicks suggest a downtrend.
- Beneficial for swing traders and investors, often utilized as a technical indicator rather than a standalone chart.
How to Conduct a Fundamental Analysis of Stocks?
In the world of stock market investments, understanding the intrinsic value of a stock is crucial. This helps investors determine whether a particular stock is undervalued or overvalued, allowing them to make informed decisions. This process of evaluating a stock based on its inherent value is termed as ‘Fundamental Analysis’. But what exactly does it involve? Let’s break it down in simple terms.
What Is Fundamental Analysis?
Fundamental Analysis is like taking an X-ray of a company’s financial health. It’s an evaluation method used by investors to figure out if the stock they are looking to invest in is cheap or expensive based on various financial metrics and data.
Deep Dive Into Fundamental Analysis
By engaging in Fundamental Analysis, you can:
- Determine Intrinsic Value: This means figuring out the real value of a stock. By knowing this, investors can decide if the stock’s current market price is above or below its actual worth.
- Understand Company Insights: The analysis reveals the inner workings of a company that might not be obvious from the outside. It’s like getting a behind-the-scenes tour of how the company operates, its strengths, weaknesses, and more.
- Examine Financial Health: One of the core aspects of Fundamental Analysis is to read and understand the company’s balance sheet, profit & loss statements, and other financial documents. This gives a clear picture of the company’s economic status and future prospects.
Key Components of Fundamental Analysis:
- Management Evaluation: Understanding the capability and past record of the company’s management team. A good management team can make or break a company’s success.
- Business Model Analysis: Delving into the company’s business model to ensure it’s sustainable and profitable in the long run.
- Balance Sheet Examination: Analyzing assets, liabilities, and shareholders’ equity to understand a company’s financial standing.
- Financial Statements Review: Assessing a company’s revenue, profit margins, and other key metrics to see if it’s profitable and worth investing in.
Conclusion
In conclusion, Fundamental Analysis is an essential tool for every investor. It provides a clearer picture of a company’s financial health, guiding investors to make sound investment decisions. Remember, the key to successful investing is not just following the crowd but doing your own research and understanding the value of what you’re investing in. Fundamental Analysis is a step in that direction.
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