Review of PC Jewellers share after recent rally

Market Growth

In last few days, we have seen a good buying in overall market. Many smallcap and midcap stocks rose between 30-100 percent in past one week. Largecaps also took a big shot and helped in to push Nifty beyond 10,500.

Crude Oil and Rupee were among the top fears for Investors investing in Indian Market. But after recent fall of $5 in Crude oil prices, investors will definitely take some relaxing breath as currency has also started taking a support. But still, USD to INR conversion rate is still above Rs70.

Once the price of both Brent crude oil and USD INR rate would fall below level of 70, the sentiment for Indian Stock Market would improve significantly. However, these two issues or concerns are not so powerful that after resolution of it, Nifty would be able to hit a new high!

Liquidity concerns and more importantly, higher Election Activity in next 6 months will keep the markets volatile for a comparatively longer period.

Yet, Q2 earnings have also not came up in the support for market as most of the companies have only reported weak or neutral Quarter. Most of the earnings which have been declared till today doesn’t contains any great surprise. Many of them have even disappointed! Only few names are there who reported higher than Expected earnings for Q2 FY19.

So, from Earnings front, I think the situation is still little neutral and would probably have no influence or very little influence on the market. But if the Crude oil and Currency comes under more comfortable situation, it will affects the market in a positive way.

At present, the environment which is surrounding our share market gives a feeling that Market has little more room to rise in Next few days. In another words, I think market may see further buying in coming days. Under current environment or sentiment, i think Nifty Index should trade within a range of 10500-11000 until any other major development take place.

 

PC Jewellers Share surges 100 percent!

PC Jewellers share strategy

Among the top losers of 2018, PC Jeweller is that one loser which lost almost 90 market capital in this year. From highs of Rs 600, stock had recently made a low of Rs 46 after heavy fall in main indexes also. But from 27 October, the story of PC Jeweller has took a major change!

From its lows of Rs 45-50, stock is now trading almost 100 percent up. On 5th November, stock has made a new monthly high of Rs 100 and was closed around 94-95 levels. Stock didn’t cross 100 level successfully but it has surely given a great bonus to those who had taken a high risk at levels around Rs 50.

Earlier in this year, factors that had made this 90 percent fall possible in PC Jeweller from 52 week highs includes

  • Allegations of wrong Business relationships with Vakrangee.
  • Withdrawal of Buyback of PC Jeweller when Board had already approved it.
  • Sale of more than 1 crore shares by a Fidelity Fund in Open market.

But none of any this factor had any relationship with its fundamentals or Potential of PC Jeweller Business. Withdrawal of Buyback was a only concerned topic because share was falling sharply and company had urgent need to support the sentiment of shareholders and investors. But company failed in doing this. Possible reason for this failure could be lower than required level of Cash and Cash Equivalents in the view of Non-Promoter Parties.

Business of PC Jeweller is still preforming well!

However, if we take a look at its business and how it is performing in market, then surely you will find and say that PC Jeweller is still among the top Jewellery brands in India. Revenue of company is also well sustainable and is above Rs 2k crore from last few quarters. Previous FY19 Q1 and  FY18 Q4 Net Profit levels was also quite good and was almost same or even was better than that quarters when the Share Price of PC Jeweller was quoting around Rs 500.

The only impact which we have seen was on the marketing Activity or you can say intensity of commercial ads, which had a major role in building the Brand Name of PC Jeweller in market.

Overall, I think whatever the reason or reasons was behind the massive fall of PC Jeweller shares in 2018, its Business of Jeweller was intact, is intact and probably continue to remain intact because PC Jeweller has a strong market share and multiple opportunities in long-term.

As the Festive Season has just started, it looks like that Forgotten Leaders of Business are again coming in the watchlist of Investors. Adani Power, Rcom, PC Jeweller etc all have witness a great buying in last few days.

As of now, there is no solid and even any soft reason in market which could take the responsibility of recent 100 percent rally in shares of PC Jewellers.

Strategy in PC Jewellers share

Now those who have bought PC Jeweller at around Rs 50 and took the higher than high risk, are sitting on the best returns in market. Those who have sold zero amount of their holdings of PC Jeweller which were bought at very lower levels have already got their Diwali and Dhanteras Bonus. And such investors or traders have now good option to book some profit at 100 level and try their luck in PC Jeweller by keeping the remaining shares of Company for some more time.

After recent rally, there would be a large number of traders who would like to trade in PC Jeweller so that they can use its strong momentum. Through Equity Shares or Future Contracts, it could be very risky to initiate any fresh position. So, go with the options strategy and use Call or Put to try this momentum in PC Jeweller. You can simply use your own Strategy of Options to earn Call and Put premiums and can safely avoid the higher risk in PC Jewellers share.

 

 

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