Indians believe in auspicious timing – “Muhurta”, which prompts investors to buy stocks during this time. This often leads to herd mentality which is reflected in the Gujarati phrase “Su leva nu muhurta ma?” Which translates to “Which stock to buy during Diwali muhurat?”
Instead of herd mentality, a systematic approach to identifying potential investment opportunities using the concept of delivery volume may be preferred. Understanding a stock’s delivery volume, especially in specific sectors, can provide valuable insight into investor behavior and market trends. Tools like Difindage’s ‘Sector Volume Scanner’ can help analyze different sectors and highlight promising stocks for the festive season.
Importance of delivery volume
Delivery volume refers to the quantity of bought and sold shares that are settled on the stock exchange. High delivery volume indicates strong confidence among investors about a stock, suggesting accumulation rather than mere speculative trading. Analysts often focus on delivery volume at the stock level, but examining sector-wide delivery volume can provide even more insight.
With the limited number of sectoral indices provided by the National Stock Exchange (NSE), DeFindage has innovated by creating 64 equal weighted sectoral indices. This allows for a more nuanced analysis of sector performance.
Focusing on the third quarter of 2024, a recent quarterly analysis of these regional indices identified regions that demonstrated delivery volumes above their historical averages.
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The top sectors emerging from this analysis are Digital India, Telecom, Battery, Defense and Metals-Non-Ferrous.
Given the significant accumulation in these sectors, it is reasonable that the bullish trend may continue.
Using a top-down approach, here are three stocks from these sectors that need your attention this Diwali.
Also read: Three Under-the-Radar Microcaps You Can Start Tracking Immediately
1. Bharti Airtel Limited
Bharti Airtel Limited is a leading telecommunication and digital India company. Founded in 1995, the company has grown rapidly, offering a variety of services including mobile and fixed-line telephony, broadband and digital television. With a strong infrastructure and commitment to innovation, Bharti Airtel has been at the forefront of expanding connectivity across urban and rural India.
bharti airtel weekly chart
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The stock recently broke out of a multi-year consolidation phase following the pandemic, indicating renewed interest from investors. Checking the weekly chart reveals substantial accumulation during Q4 2020 and Q1 2021, giving a boost to the stock more than 600 1,700.
This bullish momentum is supported by the 50-week exponential moving average (50WEMA) channel, which has served as a strong support level throughout the rally. As the stock reaches this channel again, it presents an attractive opportunity for readers to take advantage of a potential price decline.
Read on for more such analyzes Profit Pulse.
2. Amarja Energy and Mobility
Amarja Energy & Mobility (ARE&M) has attracted attention with its impressive performance in the rapidly growing energy and mobility sector. As the world moves towards green energy solutions, Amarja Energy & Mobility is poised to lead this change.
ARE&M Monthly Chart
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The stock recently surpassed its previous high from 2015, as well as the highest monthly volume recorded.
This surge in volumes is significant as it reflects strong investor confidence in the stock. Despite market volatility, sustained trading above this breakout level indicates strong strength.
As the demand for energy solutions continues to grow, ARE&M could be a significant player in the energy and battery sectors, making it a worthy addition to your Diwali watchlist.
Also read: These three stocks doubled their dividends in five years. Can they do it again?
3. Hindustan Zinc Limited
Hindustan Zinc Limited offers an attractive investment story for those interested in the metals and commodities sector. The ongoing rise in silver and zinc prices is favorable for the company’s growth prospects.
hind zinc monthly chart
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Historical data shows that the stock has experienced a significant accumulation phase since 2008, with a breakout occurring in 2016. Subsequently, a re-accumulation period occurred between 2018 and 2023, bringing the stock within the markup phase – a bullish phase according to Wyckoff’s theory of market behavior.
The recent price decline provides a potential strategic entry point for readers looking to profit from the ongoing commodity rally, making it a prime candidate to keep an eye on this Diwali.
In conclusion, as we approach Diwali, it is necessary to adopt a more analytical approach to stock selection, going beyond the herd mentality often seen during this festive season. Readers can identify promising opportunities rooted in real market trends by focusing on delivery volumes at both the stock and regional level.
Also read: Up 900% in three years, will Diwali take this jewelery stock to new heights?,
Note: The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. This is not a recommendation. If you wish to consider any investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
As per SEBI guidelines, the author and his dependents may or may not hold the stocks/commodities/cryptos/any other assets discussed here. However, Defined’s clients may or may not own these securities.
Brijesh Bhatia has over 18 years of experience in India’s financial markets as a trader and technical analyst. He has worked with companies like UTI, Asit C Mehta and Edelweiss Securities. Currently he is an analyst at Defendage.
Disclosure: The author and his dependents do not own the stocks discussed here. However, Defined’s clients may or may not own these securities.
