BEL is just above its 52 week low. It is trading with low volumes in the last 2 days. On some online forum, I read an opinion of a person who identified this phenomenon as "Sellers un-willing to sell at this price and hence volumes being lower." Let us analyse this statement. If sellers are unwilling to sell at that price, and buyers are desperate, then the price should shoot up. This is not happening. Maybe, it will happen with a time lag.
Now, let us look at this in another way. BEL has so far been supported by value buyers and that value buying is drying up because, eventually, such buyers who spotted this share run out of the funds allocated for this share. (As the share keeps falling.) Some proof of truth in this statement can be drawn from the following facts:
1. BEL, when it moves up, moves in just 1 or 2 minute spurts with volumes exceeding 100K in less than a minute. (Large buyers pumping in money and maybe some stoplosses hit)
2. Whenever Share price increases, Futures OI decreases and whenever share price decreases, futures OI increases. This shows short term traders are betting more on the price going down.
3. BEL regularly has about 50% deliverables. However on the days of price decrease, the deliverable % goes down. This was noticed in the last two days when price decreased.
So the conclusion based on the above observations is that only long term value investors spot this share and pump money into it. If such investors run out of their allocated funds for this share, then the price falls.
Why does it fall? Because many traders and some investors who must be offloading do not seem to have good opinion of the prospects atleast for near term. Actually, this is a very good company. But short term prospects are not great looking at the current political winds. Current year order books may not be as exciting as those of last year.
So what is likely to happen? It could test previous 52 week low of 101.30. Then it could test the psychological point of Rs.100. Then it could go down all the way to 90 or 80. Why those numbers? Okay 52 week high was at 193. It is very common for 52 week low for mid size and small size companies to be 1/3 of their 52 week high. That gives a bottom range of 60~70. But ride there may not be smooth. Big players who pumped in money at 110 will reallocate more funds at those lower prices. Alternately, others may off load due to frustration or for the reasons of their regular reporting requirements of NAV of their funds.
I may be right or wrong. It is easy to comment early in the morning before the markets open. More so, when the share moved in my direction in the last two days. All of us are smart when the prices move in our direction for some time. But trading is a probability game. We do not know what happens next. I am certainly not more intelligent than any of you here are. I am also not more intelligent than the other person who posted on the other forum. Let us see how it goes from here.
Now, let us look at this in another way. BEL has so far been supported by value buyers and that value buying is drying up because, eventually, such buyers who spotted this share run out of the funds allocated for this share. (As the share keeps falling.) Some proof of truth in this statement can be drawn from the following facts:
1. BEL, when it moves up, moves in just 1 or 2 minute spurts with volumes exceeding 100K in less than a minute. (Large buyers pumping in money and maybe some stoplosses hit)
2. Whenever Share price increases, Futures OI decreases and whenever share price decreases, futures OI increases. This shows short term traders are betting more on the price going down.
3. BEL regularly has about 50% deliverables. However on the days of price decrease, the deliverable % goes down. This was noticed in the last two days when price decreased.
So the conclusion based on the above observations is that only long term value investors spot this share and pump money into it. If such investors run out of their allocated funds for this share, then the price falls.
Why does it fall? Because many traders and some investors who must be offloading do not seem to have good opinion of the prospects atleast for near term. Actually, this is a very good company. But short term prospects are not great looking at the current political winds. Current year order books may not be as exciting as those of last year.
So what is likely to happen? It could test previous 52 week low of 101.30. Then it could test the psychological point of Rs.100. Then it could go down all the way to 90 or 80. Why those numbers? Okay 52 week high was at 193. It is very common for 52 week low for mid size and small size companies to be 1/3 of their 52 week high. That gives a bottom range of 60~70. But ride there may not be smooth. Big players who pumped in money at 110 will reallocate more funds at those lower prices. Alternately, others may off load due to frustration or for the reasons of their regular reporting requirements of NAV of their funds.
I may be right or wrong. It is easy to comment early in the morning before the markets open. More so, when the share moved in my direction in the last two days. All of us are smart when the prices move in our direction for some time. But trading is a probability game. We do not know what happens next. I am certainly not more intelligent than any of you here are. I am also not more intelligent than the other person who posted on the other forum. Let us see how it goes from here.
Last edited: