Spencer's Retail - A Full Toss for the 'Swing'?

India's second richest man, after Mukesh Ambani, Radhakishan Damani has exhibited an interest in the RP-Sanjiv Goenka Group led Retail Company - Spencer's Retail. He has invested in a little over than 16.6 lakh shares of the company, making his paid-up capital over 2%. This rejigs to his portfolio came in the last quarter of the year 2019.

The stock rallied over 60% in only a few trading sessions before the union budget announced by the honourable finance minister of India. This came exactly one year after Sanjiv Goenka Group made the chain of stores debt-free and hinted towards a rapid expansion plan.

Why be interested now?

With the success of DMart, one can be confident about Mr Damani's understanding of the retail business model that is profitable in India. If he has invested in the company, it might hint the amelioration of the fundamentals of the company is here to stay for long.

Long term investment needs rigorous study of fundamentals of the company, the management and the long term vision for its impact on society. But, seeing an opportunity staring right in the face, it is time for a trading opportunity.

4 hour chart for Spencer's Retail - chartink

UP-SIDE Swing || Target - Rs. 125-130:

With the share price showing regular resistance at Rs.90, the current price of Rs. 88.85 presents a lucrative opportunity for swing traders (Swing Traders are traders who close their trades in short periods extending maximum over to a few weeks). The blue horizontal line shows resistance, while the 3 black lines on the right side of the chart show a chance of high profitability.

The pattern in the black lines is the up-flag pattern and once the trend breaks the pattern in the direction of uptrend, our target price of Rs.125 shall be achieved. The sentiments regarding the industry are positive despite the outbreak of coronavirus and high volatility in the market. The technical parameters suggest either a buy or a neutral rating with a modest RSI above 50 in daily charts, suggesting a decision only when swing confirmed.

The 'long' call should only be initiated provided the closing of tomorrow's trade session is above Rs.92-93 with high volumes of trading. This confirms the breaking of the flag and the share shall achieve the target within a few trading sessions, provided no exogenous news impedes the speed.

DOWN-SIDE Swing || Target - Rs. 76-74:

Since the volumes of trade are high on the days when the share price increases, with open interest not changing much, bullish sentiments on the stock are evident. But, in the last 4 hours of the trading session last Thursday, the resistance was respected and the prices were brought to below Rs.90 after the day's high of over Rs.95. This might mark a trend reversal.

The net loss of the company has widened to Rs.39 crores and the all-supreme Indian bourse might have missed an indication. The reversal might set the stock back into a correction. With no F&O impending this week, the stock will witness no squeezing and force on trade settling through those derivatives.

If the downfall extends, either because of flag extension or correction due to change in investor sentiments, the target of the downfall will be Rs. 76. A breaking of that key support level will suggest that the share may plummet further - then requiring a further study of the situation.

What to do?

In either case, the trend of the stock can be confirmed only in the next couple of trading sessions, with volume and open interest as the paramount indicators. The stock has huge potential for returns and as a swing trader, one needs to keep an eye for potential returns.

*Disclaimer: I am also a learning investor and do not persuade anyone for any kind of trade. I am not liable for anyone's loss. I have only shared my opinions and study for the reference of others. Pictures are taken from google and personal collection.