We can see many experts on media talking about Coal India and suggesting Investors to keep it in their portfolio. For last 5 years Coal India remained as an average stock with no returns, then why all of a sudden it’s in the radar of many traders and investors? It has to do with recent performance against Nifty 50! Coal India rallied from 236 to 280 in the month of Sep – Oct 2017. During the same period Nifty and other major stocks witnessed high volatility and corrections.
Nifty, Sensex and other major stocks are quite overvalued might stay in sideways trend or even unfold into a short-term correction.(Though long-term bull market is still in place, what we are witnessing is a short-term movement within the long-term trend) Whereas Coal India and other few stocks rose significantly in the same period – it caught the attention of Domestic institutions. Involvement of these Domestic institutions changed the overall bias and sentiment in Coal India.
At the end of September 2017, share prices broke the resistance zone at 262-265. It’s pretty tempting to get in when shares are making highs, be patient and wait for Price action to retest and validate the bullish conviction. Gauge the momentum and trade according to developing price action.
