I bought Thirumalai Chemicals based on the candlestick charting technique. But I was looking for the reason why the stock surged 600% in this year of 600%.
But I was not able to find the reason of 600% gain but I can explain the meteoric rise from the price of 628 (19th October) to 984 (2nd November). It was too quick for such huge gains.
Also many candlestick traders shorted the stock in perfect time after the inverted hammer. As you can see a sheer selling pressure as well as lack of upside move (due to inverted hammer); high volume and it was out of Bollinger since long time – so it was called back to where it rightfully belong – a case of supply and demand!
But here are some facts
If you see here you can see – “Thirumalai Chemicals Ltd has informed BSE that Shri Arun Ramanathan has been appointed on October 19, 2016 as an Additional Director on the Board of the Company.”
The amazing fact about Arun Ramanathan is whenever he joins as a board member or director of any company a huge rise of share price occurs following a large some block deal.
This person is connected to 39 board members in 5 different organizations across 23 different industries.
He was a Secretary for Department of Financial Services at Ministry of Finance, Govt. of India, Secretary of Chemical and Petrochemicals at Govt. of India, Union Finance Secretary of Govt. of India.
In short, he is too powerful in the chemical industry and heavily backed by many Government Officials.
Apart from the block deal of 28th October accounting 5.76 Cr; I estimate about 12–14 Cr was invested biasing on this news.
Here is another such guy named – Anthony Ho; company’s’ shares turn supreme high when he joins any Australian company.
Also here goes another stock where tons of persons affiliated with ministry made block deals and huge investment during the September. You can make google alert for certain comment densities. It works!(at least for me in case of some shares).
But I do not think the stock is fundamentally sound anymore considering the fact the promoters have decreased their stake significantly and it’s trading at high CMP / BV in compare to its peers.
I think someone powerful like Mr. Arun is a strong fundamental news.
Also the company stock has not been in bucket for dividend paying stocks as its peer Tata Chemicals is giving more dividend.
Most of the peers’ promoter holdings are low. The only sane stock which I found good when I took my money out of Thirumalai Chemicals is Deepak Fertilizers. I bought it at 167 and I was planning to sell it by 250 but it shied away from 242 so being impatient and fearful of technicals, I might close it tomorrow and put that money to either ONGC or Voltas.