Ambuja Cement: Is it a good Buy now? My perspective on the stock

1 בפבר׳ 2023

I'm no expert with respect to understanding financials in details so cannot comment on Debt of Ambuja cement and allegations made by certain group.

Fundamentally, If we are to look at business potential, India is still a developing country and demand for Cement is going to be there and it will rise...

Risk factor: Adani has huge expansion plans for which it has taken debt too. If demand rises then the additional supply that additional capacity will bring in will be taken care of. However if demand for cement increases at slower pace than anticipated based on which additional capacity has been planned then it could put the whole pressure on capacity utilization and thereby on Profit margins.

Again let me reiterate, I'm no Fundamental Analyst but that is my understanding of the fundamentals of the business.
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That being said, as a Technical chartist, let's look at Ambuja cement based on charts.

On October 28, 2022, I had mentioned that the Upside target for Ambuja Cement has almost been done and the next opportunity is on the short side.

With the stock now 40% down, is it a good level to buy now?

If we look at charts,
- the stock has traded above 500 odd levels for 4 and a half months. And now has suddenly taken a big dip entrapping a lot of Bulls.
- it has broken important Line of breakout / breakdown ( I have marked that in the chart)
- any up move from here and lot of trapped traders might look to exit.
- It does not give confidence to go long as Supply could be very high if the stock moves up.

The next line of support is around 266-293 where Risk::Reward ratio would look better.

So any dips towards that zone Looks for signs of stability
- one can look to nip in slowly. Don't go all in... Spread your buy across days / weeks.
- If 266 is being breached don't add further immediately. Wait for further cues.
- Below 266 next important zone is around 233-240 odd levels and below that 190-202 odd levels.

These are my decision making levels. I go by levels and let market tell me what to do next.

Before Budget I had given my POA (Plan of Action) based on charts. and that was to short if market comes around 18000.

Today when those levels came in, I executed my Plan on the short side (again it was updated during market hours).

At that point of time it might have seemed foolish...
as market was giving illusion of being Bullish...

However charts and data were not supporting bullish view
Results are in front of you of what happened next.

If I talk about Nifty Index, chart is still looking weak and I'm yet to see improvement in derivatives data.

So Don't be in a hurry.

Posting this as I have got requests as to whether it is a good time to buy Ambuja cement (or for that matter Adani stocks).
So giving my perspective on the stock and my Plan.

Before taking any decision do review your Risk tolerance and Time tolerance. Trust you find the analysis helpful in planning your trade.

If you too any stock queries you can let me know in the comment section below. I would try to answer them over the weekend.

Take care of your health and mind.

Disclaimer
- The view expressed here is my personal view
- Past performance is not a guarantee for future predictions
- Use this for educational purpose
- Any decision you take, you need to take responsibility for the same
- It's your hard earned money. Treat it wisely
- Trade / Invest keeping in mind your trading style, goals and objectives, time horizon & risk tolerance
- if trading in F&O, understand that F&O trading involves risk
- Do take proper risk management measures
- Do your own analysis and consult your financial adviser if need be