Let the under-performing…..

One of the clear signs of trend reversal in a bull market happens when the outperforming stocks of yesterday start the signs of under-performance as the days goes by. The Index continues to surge in the same direction but the darlings take a nap. The same is the case with the falling market. There are some stocks those fall very steep surprises the retail investor and very little could understand. The outright sell off will be seen with steep falls, as the days pass by every body could recognize that what was happened?.The Deep-pockets garner the best opportunity to sell at higher levels and they also enjoy the early gains of up trend.

In this bleak scenario there could be silver ling to identify the trend reversal. The stock price always speaks the truth louder than the news. A clear observation can through the opportunity to the retailers also. The trend reversal can be identified once the weakest sector finds buying interest in the market by the smart people that could be the secret why these weak stocks won’t fall however deep the market falls.

To validate the above observation it is necessary that the underperforming sectors in the market at this point in time- Real estate and Capital goods shall start perform. So it is very important to see DLF trades above 496-503 level, Unitech shall trade above 210-214 level and the India Bulls Real estate above 395-400 level. The capital goods sector though has some silver lining with orders at disposal but the heat of raw material costs eating into the profits, thus evaporations of current prices to settle with lower P/E valuations. This sector has huge potential to outperform in future but the U-turn possible only when the price of L&T trades above 2750-2800 level, the BHEL shall trade above 1550-1585 and the ABB shall trade above 1020-36 level.