What the Hell is Happening?

I’ve written about my position in Gitanjali Gems earlier (here, here and here). If you go back to those posts, you’d see how I’d likened that stock’s ascent to a Diwali rocket. I guess the sad truth is that now the rocket having spent it’s glory in a sparkling display of fireworks is now descending to terra firma in tattered parts. Bearish international reports on gold must have induced some FIIs to sell off tipping the cart. Given that the June expiry was neigh, brokers seem to have stumbled triggering margin calls to fund leveraged positions that were rapidly turning out of money. Poor people like me can only pontificate and sagely philosophize that apart of 1/3rd of their sales coming from low margin gold sales, nothing much is wrong with the business model of the company. Once the churn is over, the stock will resume it’s upward climb. My position is still in the money since I was sitting on an almost five bagger on this one. I feel like a complete ass however – there was a good deal of time to act between the finmin’s announcement to increase import duties on gold and the stock tanking. If I really am a long believer in the scalability of the retail and Bollywood advertising (therefore costly!) driven sales model of Gitanjali, could I not have sold at around the top (not as a deja vu moment, but as a result of a logical reaction to finmin’s tightening of the Indian gold scene)??? Things are always easier said when in hindsight, but this one I genuinely regret. I do remember thinking about this a couple of times and dismissing the thought telling myself that they mostly sell jewellery and not gold, so shouldn’t be a problem. I hadn’t bothered to check inventory unfortunately. And therein lies the rub. 😦

The other stock that I have been staring at for quite some time this weekend is that of Tata Coffee. I mean since when have better known counters started dislaying a pattern that looks like a square wave? remember all those electronic waveforms – saw tooth (quite common in Indian markets), sine wave (maybe long term commodity plays show this – haven’t checked) and now this square wave, like the 555 timer output waveform!! This Grand Canyonish stock chart also seems to suggest of brokerage firms triggering massive scale sell offs due to margin pressure on their client positions. It may not be related with the global price of coffee at all. Thinking if this is a cup to sip at all – not personally in the mood to do any research about the stock.

Followup post on Tata Coffee: 

– you may be aware of this, but I wasn’t. Kotak Mahindra Prime, one of the largest institutional investors into Tata Coffee sold a big deal as did one individual investor.

– this again triggered some margin calls and ergo the price is now really lying low. 

– if it falls a little bit more – say 935 – 950, it might be a good position to take.