Jul 292009
 

Opto Circutis India Ltd

Opto Circuits India Ltd appears in many portfolios that have Bharat Shah as the advisor. (Incidentally, Bharat  is the famed fund manager from Ask Investment Managers). As Bharat is a value investor, I figured that he and his team must have done sufficient research about the desirability to have this stock in their portfolio for the long haul.  As I have recently decided to start investing in India myself, it made sense to look at each of the many stocks he has in his kitty. The first one I looked at is Opto Circuits.

We all know that even if we select a good stock, the price we pay for it will determine our investment success. Thus, I am willing to wait for a level where I will be comfortable buying Opto Circuits. Take a look at the attached chart, where you will see Elliott Wave counts of this Indian stock. You will observe that after a five wave move higher from its lows, the stock has already corrected by 50%. However, if that dip was the 2ndwave, shouldn’t the next rally be substantially stronger (being a potential 3rd wave)? This is not the case. Clearly, we seem to be in the middle of a so-called second retracement that often shows up when we get an extended fifth wave. The bottom line is, using Elliott wave analysis, we can conclude that a desirable price to start accumulating OptoCircuits will be not before 118.00. Accordingly, I am going to set my alerts in Money Control to send me an email when we reach 120. Now don’t be surprised if this stock first goes to 220. I don’t care even if it goes to the moon. The time to buy this will be near 117. Cheers!

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