»Profit Hunter by Equitymaster

On This Day - 29 MAY 2020
The Locusts Are Coming! Are You Buying the Right Stocks?

Apurva Sheth, Editor,Profit Hunter Pro

If the coronavirus crisis wasn't enough, we must deal with locusts now. Several states in India are attacked by locusts.

I am sure you may have seen videos of locusts in cities like Jaipur which went viral on the web. As I write this piece I am getting calls and messages from relatives and colleagues that locusts have entered Mumbai.

My mom is frantically shutting every window in our house while I laugh my wits out.

Mom, it's just locusts and not a lion, I said but she ignored me and shut down each window.

My mom certainly wants to be prepared before the locusts arrive and do any damage to us or our house.

My mom was feeling relaxed after she shut down each window in our house. It didn't matter to her whether the locusts arrive or not. She was fully prepared!

And the prior warning helped her prepare and protect.

What if we had a similar warning system to protect ourselves from any downside in the market? Even better, what if we could use it to our advantage and profit from it?

Well, we already have such a system.

I'll tell you what it is but first...check out this chart.

This is the performance of agrochemicals and pesticides companies this week on the NSE.


The locust attack may have an adverse impact on food grain production and may even lead to some amount of inflation.

But what might be a crisis for some is probably turning out as opportunity for others. Most of these stocks have done quite well this week.

Locusts entered India via Pakistan about a week ago. Farmers would need pesticides to protect their standing crop. This would be a big positive for these companies.

It seems obvious now but may not have been a week ago. That's because there's lot of flow of news and information in our lives. It's difficult to filter out the signal from the noise.

Fortunately, we have a system which does that for you. The system uses nothing but price action to filter the signal.

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Smart traders would have gone ahead and bought these stocks early. This buying activity would leave certain imprints in the price action. We must know how to identify them.

I share a T20 list every day with members on our Telegram channel. Here's a post I shared on the channel on Tuesday along with an excerpt...

May 26, 2020
New 20 Day High New 20 Day Low 20 Day Volume Gainers 20 Day Top % Gainers 20 Day Top % Losers
BASF AUBANK IRB BIRLACORPN INDIACEM CHALET
BAYERCROP BAJAJCON JINDALSAW JKLAKSHMI MPHASIS IBVENTURES
BIRLACORPN CCL JKPAPER BAYERCROP LTI MAGMA
COROMANDEL CENTRALBK KIRLOSENG ABCAPITAL BAYERCROP IBULISL
DELTACORP CHENNPETRO KPRMILL STARCEMENT CGCL IBREALEST
EMAMILTD CHOLAHLDNG KTKBANK INDOSTAR OFSS SHOPERSTOP
GODREJIND COCHINSHIP LAKSHVILAS GODREJIND REDINGTON GET&D
GPPL CREDITACC MAGMA HEIDELBERG ISEC FRETAIL
GRINDWELL DBCORP MMTC ORIENTCEM EDELWEISS AUBANK
INDIACEM DCAL NESCO DALBHARAT ADANIGREEN HFCL
JKCEMENT DCBBANK NLCINDIA IEX JBCHEPHARM DCBBANK
JKLAKSHMI FLFL PGHH JKCEMENT JKLAKSHMI SHK
KSCL FORTIS PNBHOUSING SCHAEFFLER BIRLACORPN EIHOTEL
MCX GESHIP PNCINFRA BASF ADANIGAS WABAG
MPHASIS GICRE PTC LAXMIMACH COROMANDEL SUNTECK
RESPONIND GNFC REPCOHOME FSL DELTACORP CHENNPETRO
GREAVESCOT SCHAEFFLER GARFIBRES VAIBHAVGBL GRAPHITE
HEG SHRIRAMCIT DCMSHRIRAM SYNGENE DBCORP
HFCL SUNTECK INDIACEM APLLTD IRB
IBULISL TCNSBRANDS PRSMJOHNSN OMAXE DHFL
IBVENTURES TIINDIA
IIFL WELCORP
  • Notice the stocks hitting new 20 day highs in the T20 list. 4 out of 20 are agro-chemical companies. I have marked them in bold. Locusts could lead to a bounty for such companies. Keep an eye.
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A stock hitting a new 20 day high is a sign it's breaking out of last one month's trading range. Such a breakout needs good level of interest from buyers as they must absorb all the selling from traders who may have bought the stocks recently and want to book profits.

So this is an imprint of buying and acts as a signal for ones who know how to look at such data.

Now the locust may go away and these stocks might also cool off in the next few days. I can't say what will happen in the future with certainty.

But one thing I know is that whenever the next opportunity arises it will leave an imprint on my T20 list.

Are you getting this list daily?

If not then you are missing out.

Join Equitymaster's telegram channel and benefit right away.

Warm regards,


Apurva Sheth
Senior Research Analyst, Fast Profits Report
Equitymaster Agora Research Private Limited (Research Analyst)

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