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GAIL (India) Ltd.
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  • Financials
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GAIL (India) Ltd.

  • 134.050.30 (0.22%)
  • Closed
  • As On: 22 Jan, 2021, 04:00 PM IST
  • Open134.00
  • High136.30
  • Low133.00
  • Prev Close133.75
  • Volume2,62,14,316
  • VWAP(₹)134.46
  • Volatile earnings

    There is volatility in earnings because the gas trading business is dependent on global LNG prices.
  • Petrochem business- Problem child

    Since the start, it has been more of a trouble maker than a sustainable value creator.
  • Deterrent for re-rating

    Being in the B2B space, there is not much scope for any sudden increase in margins. At the same time, a clutch of issues on pricing by the regulator keeps the door open for a negative surprise
  • Will it, won’t it?

    Bifurcation of the transmission and marketing businesses has been denied by the management. But some sort of a reorganisation is needed to put shareholder value back on track.

Found Insights useful?

Key Metrics

  • PE Ratio(x)7.10
  • EPS - TTM(₹)18.89
  • MCap(₹ Cr.)60,458.45
  • MCap Rank4
  • PB Ratio(x)1.22
  • Div Yield(%)4.77
  • Face Value(₹)10.00
  • 52W High(₹)146.20
  • 52W Low(₹)65.00
  • MCap/Sales0.48
  • Beta(1 Month)0.53
  • BV/Share(₹)109.43

Returns

  • 1 Day0.22%
  • 1 Month13.12%
  • 3 Months51.21%
  • 1 Year6.47%
  • 3 Years-21.85%
  • 5 Years29.89%

Financials

    • Topline Contraction

      Sales de-grew by 4.33%. Company witnessed revenue contraction for the first time in last 3 years. (Source: Consolidated Financials)
    • Employee & Interest Expense

      Company has spent less than 1% of its operating revenues towards interest expenses and 2.25% towards employee cost in the year ending Mar 31, 2020. (Source: Consolidated Financials)
    Sep 2020Jun 2020Mar 2020Dec 2019Sep 2019
    Total Income14,091.2312,332.6518,878.3518,078.7318,470.74
    Total Income Growth (%)14.26-34.674.42-2.12-0.84
    Total Expenses12,919.0812,001.5315,720.7516,246.2617,049.82
    Total Expenses Growth (%)7.65-23.66-3.23-4.713.04
    EBIT1,172.15331.123,157.601,832.471,420.92
    EBIT Growth (%)254.00-89.5172.3128.96-31.70
    PAT1,111.78654.334,728.372,024.661,167.07
    PAT Growth (%)69.91-86.16133.5473.48-22.30
    EBIT Margin (%)8.322.6816.7310.147.69
    Net Profit Margin (%)7.895.3125.0511.206.32
    Basic EPS (₹)2.471.4510.484.492.59
    Sep 2020Jun 2020Mar 2020Dec 2019Sep 2019
    Total Income14,366.6612,328.2418,266.3418,079.6918,479.99
    Total Income Growth (%)16.53-32.511.03-2.170.10
    Total Expenses12,788.8911,922.5515,677.7116,183.9016,916.98
    Total Expenses Growth (%)7.27-23.95-3.13-4.332.79
    EBIT1,577.77405.692,588.631,895.791,563.01
    EBIT Growth (%)288.91-84.3336.5521.29-22.02
    PAT1,239.67255.513,018.201,250.651,064.25
    PAT Growth (%)385.17-91.53141.3317.51-17.34
    EBIT Margin (%)10.983.2914.1710.498.46
    Net Profit Margin (%)8.632.0716.526.925.76
    Basic EPS (₹)2.750.576.692.772.36
    FY 2020FY 2019FY 2018FY 2017FY 2016
    Total Revenue74,054.8577,404.1655,309.0749,558.1252,804.38
    Total Revenue Growth (%)-4.3339.9511.60-6.15-14.23
    Total Expenses65,872.5168,348.1748,539.1344,010.7149,855.50
    Total Expenses Growth (%)-3.6240.8110.29-11.72-12.75
    Profit after Tax (PAT)9,422.056,545.744,799.073,368.161,869.22
    PAT Growth (%)43.9436.4042.4880.19-40.85
    Operating Profit Margin (%)11.7112.0912.9612.477.24
    Net Profit Margin (%)12.998.598.806.933.59
    Basic EPS (₹)20.8929.0321.2814.9411.05
    FY 2020FY 2019FY 2018FY 2017FY 2016
    Total Revenue73,287.8076,671.1154,648.5849,325.1252,771.85
    Total Revenue Growth (%)-4.4140.3010.79-6.53-8.39
    Total Expenses65,446.0767,259.9647,717.9043,615.5749,599.05
    Total Expenses Growth (%)-2.7040.959.41-12.06-7.09
    Profit after Tax (PAT)6,620.636,025.674,618.413,502.912,298.90
    PAT Growth (%)9.8730.4731.8452.37-24.36
    Operating Profit Margin (%)11.0612.7113.4212.857.34
    Net Profit Margin (%)9.218.028.607.274.42
    Basic EPS (₹)14.6826.7220.4815.5318.12

    All figures in Rs Cr, unless mentioned otherwise

  • AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Total Assets74,914.1868,407.4061,334.1458,271.0759,037.59
    Total Assets Growth (%)9.5111.535.26-1.30-15.23
    Total Liabilities25,558.8922,357.3519,616.6518,933.1822,606.93
    Total Liabilities Growth (%)14.3213.973.61-16.25-33.24
    Total Equity49,355.2946,050.0541,717.4939,337.8936,430.66
    Total Equity Growth (%)7.1810.396.057.981.82
    Current Ratio (x)0.961.040.971.010.95
    Total Debt to Equity (x)0.130.050.050.100.18
    Contingent Liabilities2,26,955.6054,360.7133,803.7712,722.4833,681.15
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Total Assets68,533.6364,378.6158,082.1855,336.9652,994.26
    Total Assets Growth (%)6.4510.844.964.420.19
    Total Liabilities24,562.5320,285.6717,754.0617,187.5922,409.39
    Total Liabilities Growth (%)21.0814.263.30-23.30-5.74
    Total Equity43,971.1044,092.9440,328.1238,149.3730,584.87
    Total Equity Growth (%)-0.289.345.7124.735.03
    Current Ratio (x)0.971.101.021.090.99
    Total Debt to Equity (x)0.120.020.020.080.19
    Contingent Liabilities2,06,242.5935,372.1535,097.5114,024.9917,572.51

    All figures in Rs Cr, unless mentioned otherwise

    • Increase in Cash from Investing

      Company has used Rs 7444.64 cr for investing activities which is an YoY increase of 30.46%. (Source: Consolidated Financials)
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Net Cash flow from Operating Activities8,345.367,984.208,768.716,024.265,918.81
    Net Cash used in Investing Activities-7,444.64-5,706.58-2,631.60-382.92-2,496.15
    Net Cash flow from Financing Activities281.22-3,364.29-5,251.62-5,275.39-2,521.28
    Net Cash Flow327.50-1,080.61857.56414.83839.90
    Closing Cash & Cash Equivalent624.13296.631,377.24519.682,398.15
    Closing Cash & Cash Equivalent Growth (%)110.41-78.46165.02-78.3353.90
    Total Debt/ CFO (x)0.760.260.240.651.13
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Net Cash flow from Operating Activities6,888.107,876.348,662.605,760.944,834.93
    Net Cash used in Investing Activities-6,828.94-5,436.60-2,567.95-380.07-1,011.33
    Net Cash flow from Financing Activities338.39-3,365.04-5,470.45-5,238.31-3,171.38
    Net Cash Flow397.55-925.30624.20142.56652.22
    Closing Cash & Cash Equivalent548.33150.781,076.08451.881,793.86
    Closing Cash & Cash Equivalent Growth (%)263.66-85.99138.13-74.8157.13
    Total Debt/ CFO (x)0.790.110.110.521.20

    All figures in Rs Cr, unless mentioned otherwise

    • Building-up Cash Reserves

      Company has consistently increased ROE in last 5 years with majority of profits being added to its reserves last year. (Source: Consolidated Financials)
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Return on Equity (%)19.1214.2211.518.565.13
    Return on Capital Employed (%)13.5915.9514.0812.367.71
    Return on Assets (%)12.579.567.825.783.16
    Interest Coverage Ratio (x)27.4957.8823.9611.904.59
    Asset Turnover Ratio (x)96.78111.3788.8583.3288.16
    Price to Earnings (x)3.6611.9815.4618.9424.21
    Price to Book (x)0.701.701.781.621.24
    EV/EBITDA (x)3.757.268.548.719.51
    EBITDA Margin (%)14.5714.2815.7615.6410.11
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Return on Equity (%)15.0513.6611.459.187.51
    Return on Capital Employed (%)13.9217.3414.9513.179.05
    Return on Assets (%)9.669.357.956.334.33
    Interest Coverage Ratio (x)73.2768.9326.1912.915.96
    Asset Turnover Ratio (x)104.86116.6992.3887.0197.96
    Price to Earnings (x)5.2113.0016.0518.1819.69
    Price to Book (x)0.781.781.841.671.48
    EV/EBITDA (x)3.997.028.428.619.60
    EBITDA Margin (%)13.6114.7716.0615.759.87
    • Structural challenges for Oil and gas sector

      The current crisis will have a profound impact on the oil & gas industry, both in the short and long term. Oil demand in particular is at risk and it may take years to regain its levels before the pandemic, and growing only slowly thereafter.

    • Carbon emission- India needs to act

      Even during last decade (2008-2018), India has registered a carbon emission growth of over 5% compared to the world average of just over 1%. Though India consumed only 5.8% of world's primary energy in 2019, but it has contributed to over 7.3% of global carbon emissions, indicating a less cleaner energy mix.

    • Growth driver - city gas distribution

      India is now the 13 largest consumer of natural gas globally and 3 in Asia Pacific region, only behind China and Japan. India's Natural Gas consumption during 2019-20 has increased by around 4% in spite of restricted activities in last week of March 2020. Overall gas consumption increased significantly primarily driven by higher LNG imports and cheaper LNG prices. Most of this consumption growth came from City Gas Distribution (CGD) and Fertilizer sector

Found Financials useful?

Technicals

  • Stochastic Crossover

    Bearish signal on weekly chart

    Appeared on: 22 Jan 2021

    Region: Overbought (Above 80)

    Last Signal 24 Dec 2020 (Loss 0.33%)

    Average price decline of -5.13% within 7 weeks of Bearish signal in last 10 years

    10 Day EMA Crossover

    Bearish signal on daily chart

    Appeared on: 21 Jan 2021

    10D EMA: 136.52

    Last Signal 21 Dec 2020 (Loss -1.79%)

    Average price decline of -2.61% within 7 days of Bearish signal in last 5 years

    14 Day EMA Crossover

    Bearish signal on daily chart

    Appeared on: 21 Jan 2021

    14D EMA: 135.14

    Last Signal 21 Dec 2020 (Loss -1.79%)

    Average price decline of -2.62% within 7 days of Bearish signal in last 5 years

    MACD Crossover

    Bearish signal on daily chart

    Appeared on: 20 Jan 2021

    Region: Positive

    Last Signal 21 Dec 2020 (Loss -1.79%)

    Average price decline of -4.14% within 10 days of Bearish signal in last 10 years

    5 Day EMA Crossover

    Bearish signal on daily chart

    Appeared on: 20 Jan 2021

    5D EMA: 138.73

    Last Signal 15 Jan 2021 (Loss -2.82%)

    Average price decline of -2.99% within 7 days of Bearish signal in last 5 years

  • 45%
    Positive Movement
    since 1st Jan 2005
    on basis
    54%
    Negative Movement
    since 1st Jan 2005
    on basis
    Exclude

    Global Meltdown1st Jan 2008 to 10th Nov 2008

    Covid Crisis1st Feb 2020 to 31st Mar 2020

  • R1135.90Pivot

    134.45

    S1132.60
    R2137.75S2131.15
    R3141.05S3127.85
  • 5 Days14 Days28 Days
    5.074.834.39

Found Technicals useful?

Peers

    • Stock Returns vs Nifty 100

      Stock gave a 3 year return of -27.6% as compared to Nifty 100 which gave a return of 25.94%. (as of last trading session)
    • CHART
    • TABLE
    • 1D
    • 1W
    • 1M
    • 3M
    • 6M
    • 1Y
    • 5Y
    • Stock Returns vs Nifty 100

      Stock gave a 3 year return of -27.6% as compared to Nifty 100 which gave a return of 25.94%. (as of last trading session)
    NAMEP/E (x)P/B (x)ROE %ROCE %ROA %Rev CAGR [3Yr]OPMNPMBasic EPSCurrent RatioTotal Debt/ Equity (x)Total Debt/ CFO (x)
    GAIL7.101.2219.1213.5912.5714.1711.7110.0220.890.960.130.76
    Adani Gas97.4927.2029.6631.2117.6116.6631.3923.273.970.940.240.79
    IGL37.266.9823.3124.5316.5519.5321.7516.8817.841.390.000.00
    Gujarat Gas24.507.2636.1322.9315.1226.2913.5911.6317.410.790.551.29
    GSPL8.051.7835.4027.4512.9526.8722.9718.6630.660.600.490.86
    Add More
    Annual Ratios (%)

    Choose from Peers

    • Mahanagar Gas

    Choose from Stocks

    Found Peer Comparison useful?

    Shareholding Patterns

    • Category31 Dec 202030 Sep 202030 Jun 202031 Mar 2020
      Promoters52.1252.1152.1052.06
      Pledge0.000.000.000.00
      FII15.6215.0915.6116.30
      DII19.8920.0619.1418.32
      Mutual Funds9.8610.6011.2611.34
      Others12.3712.7413.1513.32
    • CategoryNo. of SharesPercentage% Change QoQ
      Promoters2,33,44,49,98752.12 %0.01
      Pledge00.00 %0.00
      FII69,97,05,81415.62 %0.53
      DII89,08,28,12219.89 %-0.17
      MF44,14,23,6449.86 %-0.74
      Others58,51,57,94312.37 %-0.37

    Mutual Funds Ownership

    MF Ownership as on 31 December 2020

    Futures & Options

      • Expiry Month
      DatePrice

      27-09-2020Current

      131.700.05 (0.04%)

      131.50
      Open
      133.95
      High
      130.60
      Low
      131.65
      Prev Close
      3,008
      Contracts Traded
      24,246.25
      Turnover (₹ Lakhs)
      • Type
      • Expiry Month
      • Strike Price
      DatePrice

      27-09-2020Current

      0.00-22.50 (-100.00%)

      0.00
      Open
      0.00
      High
      0.00
      Low
      22.50
      Close
      0
      Contracts Traded
      0.00
      Turnover (₹ Lakhs)

    Corporate Actions

    • Board Meeting

      Quarterly Results

      Oct 27, 2020

      General Meeting

      -

      Aug 24, 2020

      Board Meeting

      Quarterly Results

      Aug 04, 2020

    • Announced onMeeting on
      Oct 27, 2020Nov 10, 2020
      Quarterly Results
      Aug 04, 2020Aug 13, 2020
      Quarterly Results
      Jun 12, 2020Jun 24, 2020
      Audited Results & Final Dividend
      Jan 28, 2020Feb 10, 2020
      Quarterly Results & Interim Dividend
      Jan 10, 2020Jan 16, 2020
      Others
    • Announced onEx-DateDividend%
      Jan 28, 2020Feb 17, 202064%
      May 27, 2019Aug 08, 20198%
      Jan 21, 2019Feb 12, 201962%
      May 24, 2018Aug 30, 201814%
      Jan 05, 2018Jan 18, 201876%
    • Announced onEx-Date
      May 27, 2019Jul 09, 2019
      Bonus Ratio: 1 share(s) for every 1 shares held
      Feb 12, 2018Mar 27, 2018
      Bonus Ratio: 1 share(s) for every 3 shares held
      Jan 25, 2017Mar 09, 2017
      Bonus Ratio: 1 share(s) for every 3 shares held
      Jun 23, 2008Oct 06, 2008
      Bonus Ratio: 1 share(s) for every 2 shares held
    • No Data Available

    • No Data Available

    • Announced onMeeting on
      Aug 24, 2020Sep 22, 2020
      -
      Jul 23, 2019Aug 20, 2019
      Book closure from Aug 13, 2019 to Aug 20, 2019
      May 31, 2019Jul 02, 2019
      -
      Jul 18, 2018Sep 11, 2018
      Book closure from Sep 1, 2018 to Sep 11, 2018
      Jul 23, 2019-
      Book closure from Aug 13, 2019 to Aug 20, 2019

    About

    GAIL (India) Ltd., incorporated in the year 1984, is a Large Cap company (having a market cap of Rs 60458.45 Crore) operating in Gas & Petroleum sector.

    GAIL (India) Ltd. key Products/Revenue Segments include Gas Natural which contributed Rs 60143.69 Crore to Sales Value (83.67 % of Total Sales), Polymers which contributed Rs 5370.65 Crore to Sales Value (7.47 % of Total Sales), Sale of services which contributed Rs 2219.09 Crore to Sales Value (3.08 % of Total Sales), Propane which contributed Rs 595.62 Crore to Sales Value (0.82 % of Total Sales), Other Operating Revenue which contributed Rs 146.78 Crore to Sales Value (0.20 % of Total Sales), Compressed Natural Gas (CNG) which contributed Rs 50.92 Crore to Sales Value (0.07 % of Total Sales), Power which contributed Rs 48.25 Crore to Sales Value (0.06 % of Total Sales), Oil Crude which contributed Rs 24.39 Crore to Sales Value (0.03 % of Total Sales) and Income From Telecom which contributed Rs 4.02 Crore to Sales Value (0.00 % of Total Sales)for the year ending 31-Mar-2020.

    For the quarter ended 30-09-2020, the company has reported a Consolidated sales of Rs 13796.29 Crore, up 13.32 % from last quarter Sales of Rs 12174.15 Crore and down -24.34 % from last year same quarter Sales of Rs 18235.45 Crore Company has reported net profit after tax of Rs 776.65 Crore in latest quarter.

    The company’s top management includes Dr.Ashuotsh Karnatak, Dr.Rahul Mukherjee, Mr.A K Tiwari, Mr.Ashish Chatterjee, Mr.Gajendra Singh, Mr.Jayanto Narayan Choudhury, Mr.Manoj Jain, Mr.P K Gupta, Mrs.Banto Devi Kataria. Company has ASA & Associates LLP as its auditors. As on 31-12-2020, the company has a total of 4,510,141,866 shares outstanding.

    About GAIL

    GAIL (India) Ltd., incorporated in the year 1984, is a Large Cap company (having a market cap of Rs 60458.45 Crore) operating in Gas & Petroleum sector. Show More

    Key Indices Listed On

    Nifty 50, Nifty 100, Nifty 200, Nifty 500, S&P BSE 500

    Address

    16, Bhikaiji Cama Place,R. K. Puram,New Delhi, Delhi - 110066

    Executive Leadership

    AK

    A K Jha

    Co. Secretary & Compl. Officer
    AK

    A K Jha

    Secretary
    AK

    A K Tiwari

    Director - Finance & CFO
    AC

    Ashish Chatterjee

    Government Nominee Director
    Show More

    Auditors

    ASA & Associates LLP

    GAIL Share Price Update

    GAIL (India) Ltd. share price moved up by 0.22% from its previous close of Rs 133.75. GAIL (India) Ltd. stock last traded price is 134.05

    Share PriceValue
    Today/Current/Last134.05
    Previous Day133.75

    DATA SOURCES: TickerPlant (for live BSE/NSE quotes service) and Dion Global Solutions Ltd. (for corporate data, historical price & volume, F&O data). Sensex & BSE Quotes and Nifty & NSE Quotes are real-time and licensed from BSE and NSE respectively. All timestamps are reflected in IST (Indian Standard Time).

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    Markets Data

    *

    Key Metrics

    • This is a ratio arrived at by dividing the current market price of a stock by its latest (annual or annualized) earnings per share. Here we have taken the TTM (trailing twelve months) adjusted earnings per share.

    • Earnings per share (TTM) tells the profit after tax earned on a per share basis by a stock over the last twelve months or four quarters.

    • MCap or Market capitalization of a stock is calculated by multiplying the total number of shares outstanding of that particular stock with its current market price.

    • This is the ranking of a company within its sector based on MCap or Market capitalization. Higher the market capitalization of a company, higher the rank it is assigned.

    • Price to Book represents the ratio of current market price of a stock to its book value per share. The book value itself is arrived at by dividing the net worth of a company by the total number of shares outstanding of the company at that time.

    • Dividend Yield calculates the amount of full year dividend declared by a company as a percentage of the current market price of a stock. All other things being equal, higher the dividend yield of the stock, the better it is for investors.

    • Face value of a stock is the value ascribed to the stock as per the balance sheet of the company. The dividend declared by a company is usually declared as a percentage of face value.

    • Beta (β) is a measure of systematic risk. It describes the responsiveness of a stock to fluctuations in the market. Beta coefficient of more than 1 denotes that a security is more volatile than its benchmark and less than 0 signifies that security return is not correlated to market movement.

    • Volume Weighted Average Price represents the average price of a security over a particular time period (example one trading day) weighted by the volume traded at each price point.

    • This represents the 52 week high and low price of the security. It is also the 1 year high and low of the security. This represents the highest and lowest price touched by the security during the past 52 weeks or 1 year including today.

    • Book value represents the value arrived at by subtracting the total liabilities from the total assets of the company. On dividing this value with the total number of shares outstanding for the company, we can arrive at book value per share. Book value is also known as Net Asset Value of a company.

    • This is a ratio of market capitalisation of a company’s stock to its annual sales. The market capitalization here is taken for the fully paid-up equity share of the company.

    Technicals

    • Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

      Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

    • Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

      Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

    • Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

      Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

    • Pivot points are indicative support and resistance levels which are calculated on basis of previous day’s high, low and closing prices. Pivot level for Monday’s trade would be based on Friday’s prices and Monday’s, high, low and close price would go into calculation of pivot levels for Tuesday’s trading session.

      There are two underlying assumptions in pivot points. First, the specific price level indicated by R1, R2 and R3 may act as a barrier or resistance in an uptrend. So, if a stock moves up above these pivots levels, the uptrend gets confirmed. Second these specific price levels may see an increased activity, hence may be used as levels to book profit by traders with a long positions. For traders with short position, these points are often helpful in determining what should be the stop loss for a trade.

      Similarly, in case of support levels as indicated by S1, S2 and S3, they may act as price level where a stock might get a breather when it is slipping southward. In case these supports levels are broken it is a confirmation of a down trend. The stock may also see increased activity close to pivot levels. They may be used by trader may use them to put stop loss for a long trade. If a trader has short position, the pivot level may help in determine a level, where profit may be booked.

      Like any other technical indicator, pivots levels cannot and should not be used as single factor while taking a trading decision. They should be combined with other technical indicators. It could be short term moving averages, stochastic, moving average convergence divergence (MACD) or overbought level as indicated by relative strength index (RSI). For example, if a breakdown of support level (S1, S2 or S3) is accompanied with stock price also moving below its short term moving average or stochastic on daily charts giving a sell signal, it would add to weightage to the decision of taking a short trade.