The WeekendInvesting Newsletter

Freshly Brewed - Market Perspectives from Weekendinvesting Research Desk

Case Study : Why we picked Zomato!

To better understand the effectiveness of momentum trading, let’s take a look at the example of Zomato Limited, a well-known food delivery company. Zomato’s stock experienced significant fluctuations over time. It initially listed at around Rs120 and reached a high of Rs170 before crashing down to nearly Rs40. It then consolidated for a prolonged period in the range of Rs 40-60. However, starting from April and May of 2023, the stock began to show a positive upward movement and even posted a small profit in July. Furthermore, in the following quarter ending in September, it continued to demonstrate profitability.

This stock’s journey illustrates an important principle – the market often anticipates . . . .

The secret of success : Casino Math

Momentum Investing is popular among investors aiming to take advantage of upward trends in stock prices. The concept behind momentum investing is simple: buy stocks that are rising and sell those that are falling. In this article, we will explore Mi MT Allcap strategy, which has been highly successful since its inception in 2018. We will analyse its transaction history and understand why it has been a winning strategy.

This strategy has executed a total of 193 transactions over a span of five years. Out of these transactions, 51% have been winners, while 48.7% have been losers. This means that this strategy has been correct only slightly more than half the time. However, the key to its success lies . . . .

WeekendInvesting Daily Byte - 27 Oct 2023

The market opened with a gap down on November 7 but eventually turned green unexpectedly. This deviation from the previous four days of continuous gains is a welcome move as it indicates a much-needed rest or correction. The Nifty closed near 19,0046, very close to the top of the range of the previous day, suggesting the potential for upward movement.

Moving on to the stock of the day, we have Zomato. Over a significant period of time, Zomato experienced a price fall of nearly Rs40. However, there was no reason to engage in the stock during this downward trend. Now that the stock has started to rise, it presents a potential opportunity for growth. Many of our strategies involved entering Zomato at around Rs85, resulting in a profit of 30-40%.

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