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UltraTech Cement Ltd.
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UltraTech Cement Ltd.

  • 5,368.40-166.40 (-3.01%)
  • Closed
  • As On: 04:04 PM IST
  • Open5,745.00
  • High5,831.80
  • Low5,326.65
  • Prev Close5,534.80
  • Volume32,36,487
  • VWAP(₹)5,615.97
  • Costs under control

    The focus of the company has shifted to control fixed cost by improving efficiency at the plant-level. As a result, the expansion in margins might last longer than one quarter.
  • Public and private spending

    Cement demand is linked to spending on infrastructure -- which is largely public expenditure -- and real estate, which is private sector-led demand. Public spending which had slowed down in the previous quarter is reviving. The real estate demand, though, might continue to drag.
  • Next trigger

    The company has been aiming to reduce its debt. Once this comes to a reasonable level, the addition to earnings is likely to improve sharply, though it takes a couple of quarters to reach that space
  • Better quarter two

    There is better-than-expected performance on volume and realisation in the second quarter. The demand in semi-urban and rural areas had been stronger after the lockdowns.

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Key Metrics

  • PE Ratio(x)22.59
  • EPS - TTM(₹)237.63
  • MCap(₹ Cr.)1,54,952
  • MCap Rank1
  • PB Ratio(x)4.08
  • Div Yield(%)0.24
  • Face Value(₹)10.00
  • 52W High(₹)5,831.80
  • 52W Low(₹)2,910.00
  • MCap/Sales2.23
  • Beta(1 Month)1.02
  • BV/Share(₹)1,355.44

Returns

  • 1 Day-3.01%
  • 1 Month6.42%
  • 3 Months19.18%
  • 1 Year15.63%
  • 3 Years23.13%
  • 5 Years95.18%

Financials

    • Employee & Interest Expense

      Company has spent 4.71% of its operating revenues towards interest expenses and 5.96% towards employee cost in the year ending Mar 31, 2020. (Source: Consolidated Financials)
    Dec 2020Sep 2020Jun 2020Mar 2020Dec 2019
    Total Income12,522.0310,489.107,912.5810,943.5510,521.95
    Total Income Growth (%)19.3832.56-27.704.017.65
    Total Expenses9,833.768,667.466,362.728,975.319,053.81
    Total Expenses Growth (%)13.4636.22-29.11-0.878.08
    EBIT2,688.271,821.641,549.861,968.241,468.14
    EBIT Growth (%)47.5717.54-21.2634.065.08
    PAT1,584.341,234.38797.433,242.77711.92
    PAT Growth (%)28.3554.79-75.41355.5022.94
    EBIT Margin (%)21.4717.3719.5917.9913.95
    Net Profit Margin (%)12.6511.7710.0829.636.77
    Basic EPS (₹)54.9342.8027.65112.4324.68
    Dec 2020Sep 2020Jun 2020Mar 2020Dec 2019
    Total Income12,092.2510,165.047,669.7410,584.2210,145.76
    Total Income Growth (%)18.9632.53-27.544.327.52
    Total Expenses9,488.328,085.156,164.488,707.018,809.39
    Total Expenses Growth (%)17.3531.16-29.20-1.169.47
    EBIT2,603.932,079.891,505.261,877.211,336.37
    EBIT Growth (%)25.2038.17-19.8140.47-3.74
    PAT1,550.281,208.67805.572,906.32643.15
    PAT Growth (%)28.2650.04-72.28351.890.62
    EBIT Margin (%)21.5320.4619.6317.7413.17
    Net Profit Margin (%)12.8211.8910.5027.466.34
    Basic EPS (₹)53.7541.9027.93100.7722.30
    FY 2020FY 2019FY 2018FY 2017FY 2016
    Total Revenue42,772.6042,072.2531,567.1926,023.0425,617.04
    Total Revenue Growth (%)1.6633.2821.301.583.72
    Total Expenses37,529.0738,490.4627,918.9922,151.0022,195.74
    Total Expenses Growth (%)-2.5037.8626.04-0.202.22
    Profit after Tax (PAT)5,814.842,403.512,222.172,714.922,478.04
    PAT Growth (%)141.938.16-18.159.5618.10
    Operating Profit Margin (%)17.1612.8815.7717.7815.85
    Net Profit Margin (%)13.805.777.1710.699.85
    Basic EPS (₹)201.6184.0280.9498.9290.30
    FY 2020FY 2019FY 2018FY 2017FY 2016
    Total Revenue41,375.7540,495.4730,384.8024,551.3824,189.45
    Total Revenue Growth (%)2.1733.2823.761.503.78
    Total Expenses36,155.9936,889.2126,856.6820,761.7420,890.89
    Total Expenses Growth (%)-1.9937.3629.36-0.622.30
    Profit after Tax (PAT)5,455.542,412.452,231.282,627.722,370.16
    PAT Growth (%)126.148.12-15.0910.8717.64
    Operating Profit Margin (%)17.0313.1315.8218.2516.07
    Net Profit Margin (%)13.426.037.4910.999.99
    Basic EPS (₹)189.1584.3381.2795.7486.37

    All figures in Rs Cr, unless mentioned otherwise

  • AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Total Assets79,337.1376,537.4357,150.5242,218.9041,203.31
    Total Assets Growth (%)3.6633.9235.372.468.25
    Total Liabilities40,214.1342,774.6330,753.3417,817.3019,242.23
    Total Liabilities Growth (%)-5.9939.0972.60-7.411.26
    Total Equity39,123.0033,762.8026,397.1824,401.6021,961.08
    Total Equity Growth (%)15.8827.908.1811.1115.22
    Current Ratio (x)0.900.831.001.600.91
    Total Debt to Equity (x)0.550.860.710.310.34
    Contingent Liabilities4,925.105,393.903,581.863,821.943,612.79
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Total Assets71,816.9269,270.9554,373.0039,281.0938,290.57
    Total Assets Growth (%)3.6827.4038.422.598.73
    Total Liabilities33,520.6035,973.5928,449.9815,340.0816,658.74
    Total Liabilities Growth (%)-6.8226.4585.46-7.921.84
    Total Equity38,296.3233,297.3625,923.0223,941.0121,631.83
    Total Equity Growth (%)15.0128.458.2810.6714.71
    Current Ratio (x)1.030.870.961.550.86
    Total Debt to Equity (x)0.470.700.640.220.23
    Contingent Liabilities10,723.7310,925.646,098.156,177.584,531.96

    All figures in Rs Cr, unless mentioned otherwise

  • AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Net Cash flow from Operating Activities8,902.025,956.113,887.725,005.024,525.51
    Net Cash used in Investing Activities-4,209.351,113.821,861.57-2,480.31-3,726.71
    Net Cash flow from Financing Activities-4,991.13-6,757.24-5,735.05-2,534.98-844.02
    Net Cash Flow-294.71364.0518.39-31.388.14
    Closing Cash & Cash Equivalent146.53441.2477.1958.8090.18
    Closing Cash & Cash Equivalent Growth (%)-66.79471.6331.28-34.80-77.03
    Total Debt/ CFO (x)2.404.084.791.491.63
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Net Cash flow from Operating Activities8,275.946,116.323,617.684,722.874,354.40
    Net Cash used in Investing Activities-3,968.01-4,000.341,891.89-2,365.12-3,756.70
    Net Cash flow from Financing Activities-4,591.35-1,768.80-5,496.54-2,382.64-582.42
    Net Cash Flow-283.42359.5713.03-24.8915.28
    Closing Cash & Cash Equivalent140.06423.4863.9150.8875.77
    Closing Cash & Cash Equivalent Growth (%)-66.93562.6225.61-32.85-64.58
    Total Debt/ CFO (x)2.193.214.581.101.15

    All figures in Rs Cr, unless mentioned otherwise

    • ROE Outperforming 5 Year Average

      Company delivered ROE of 14.86% in year ending Mar 31, 2020 outperforming its 5 year avg. of 10.74%. (Source: Consolidated Financials)
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Return on Equity (%)14.868.478.4211.1311.29
    Return on Capital Employed (%)11.528.7810.7013.3113.47
    Return on Assets (%)7.323.143.886.436.01
    Interest Coverage Ratio (x)3.643.013.957.057.04
    Asset Turnover Ratio (x)53.0954.3654.2060.1061.04
    Price to Earnings (x)16.1645.8749.0240.4935.84
    Price to Book (x)2.403.874.114.494.04
    EV/EBITDA (x)11.5517.0818.8419.5817.46
    EBITDA Margin (%)23.5718.7721.7323.0921.32
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Return on Equity (%)14.248.648.6010.9710.95
    Return on Capital Employed (%)12.039.6010.8813.9614.11
    Return on Assets (%)7.593.484.106.686.18
    Interest Coverage Ratio (x)4.063.193.977.637.45
    Asset Turnover Ratio (x)56.6057.7454.7860.8261.91
    Price to Earnings (x)17.2445.6648.7841.8437.45
    Price to Book (x)2.453.944.184.574.09
    EV/EBITDA (x)11.9117.0019.2619.9917.88
    EBITDA Margin (%)23.0718.9421.7423.5621.54
    • Slowdown in growth of industry

      Though the demand started indicating some signs of improvement since December, 2019, the momentum could not be sustained due to the outbreak of the COVID-19 pandemic. This severely impacted construction activities, which consequently resulted in the industry witnessing de-growth for the year, the first time in the last two decades.

    • Decline in logistic cost

      Logistics cost reduced from Rs 1,187/t to Rs 1,144/t due to a reduction in lead distance and exemption from busy season surcharge on railway freight for an extended period. Diesel prices were also lower by 4% over the previous year. Moreover, the integration of acquired assets supported in realising synergies, thereby lowering logistics costs.

    • Being Hopeful is the key

      With anticipated pick-up in private investment, financial sector reforms and resolution of stressed assets under the Insolvency and Bankruptcy Code, expected to contribute to cleaning up of banks’ balance sheets and positive interventions by the Government of India, the outlook for fiscal 2020-21 was seen to remain largely positive

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Technicals

  • 5 Day EMA Crossover

    Bearish signal on daily chart

    Appeared on: 25 Jan 2021

    5D EMA: 5472.69

    Last Signal 15 Jan 2021 (Loss -2.31%)

    Average price decline of -2.02% within 7 days of Bearish signal in last 5 years

    10 Day EMA Crossover

    Bearish signal on daily chart

    Appeared on: 25 Jan 2021

    10D EMA: 5480.10

    Last Signal 15 Jan 2021 (Loss -2.31%)

    Average price decline of -2.14% within 7 days of Bearish signal in last 5 years

    14 Day EMA Crossover

    Bearish signal on daily chart

    Appeared on: 25 Jan 2021

    14D EMA: 5461.87

    Last Signal 18 Jan 2021 (Loss 0.14%)

    Average price decline of -2.09% within 7 days of Bearish signal in last 5 years

    20 Day EMA Crossover

    Bearish signal on daily chart

    Appeared on: 25 Jan 2021

    20D EMA: 5419.81

    Last Signal 21 Sep 2020 (Loss -3.22%)

    Average price decline of -2.28% within 7 days of Bearish signal in last 5 years

    Stochastic Crossover

    Bearish signal on weekly chart

    Appeared on: 22 Jan 2021

    Region: Overbought (Above 80)

    Last Signal 24 Dec 2020 (Loss 0.21%)

    Average price decline of -5.05% within 7 weeks of Bearish signal in last 10 years

  • 47%
    Positive Movement
    since 1st Jan 2005
    on basis
    53%
    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

  • R15691.25Pivot

    5508.95

    S15186.10
    R26014.10S25003.80
    R36519.25S34498.65
  • 5 Days14 Days28 Days
    209.41165.48148.00

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Peers

    • Stock Returns vs Nifty 100

      Stock gave a 3 year return of 26.95% as compared to Nifty 100 which gave a return of 25.94%. (as of last trading session)
    • Stock Returns vs Nifty Infrastructure

      Stock generated 26.95% return as compared to Nifty Infrastructure which gave investors 5.38% return over 3 year time period. (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 26.95% as compared to Nifty 100 which gave a return of 25.94%. (as of last trading session)
    • Stock Returns vs Nifty Infrastructure

      Stock generated 26.95% return as compared to Nifty Infrastructure which gave investors 5.38% return over 3 year time period. (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)
    UltraTech Cem.22.593.9614.8611.527.3217.8217.1613.79201.610.900.552.40
    Ambuja Cements22.941.718.7012.935.2110.3114.8510.1910.551.580.000.01
    ACC25.372.7011.9317.088.0312.1913.578.7073.351.600.000.00
    Heidelberg Cem20.693.8120.3925.319.598.3921.7512.3511.831.100.210.61
    Add More
    Annual Ratios (%)

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      Shareholding Patterns

      • Category31 Dec 202030 Sep 202030 Jun 202031 Mar 2020
        Promoters59.9759.9160.0460.04
        Pledge0.000.000.000.00
        FII16.8015.3016.1016.48
        DII14.1015.3814.5914.15
        Mutual Funds9.4310.5310.6110.51
        Others9.139.419.279.33
      • CategoryNo. of SharesPercentage% Change QoQ
        Promoters17,30,83,11359.97 %0.06
        Pledge00.00 %0.00
        FII4,84,99,65616.80 %1.50
        DII4,06,94,54114.10 %-1.28
        MF2,72,04,7519.43 %-1.10
        Others2,63,59,5969.13 %-0.28

      Mutual Funds Ownership

      MF Ownership as on 31 December 2020

      Futures & Options

        • Expiry Month
        DatePrice

        27-09-2020Current

        5,369.30-198.30 (-3.56%)

        5,725.50
        Open
        5,824.45
        High
        5,332.05
        Low
        5,567.60
        Prev Close
        18,419
        Contracts Traded
        2,07,429.99
        Turnover (₹ Lakhs)
        • Type
        • Expiry Month
        • Strike Price
        DatePrice

        27-09-2020Current

        0.00-1,612.65 (-100.00%)

        0.00
        Open
        0.00
        High
        0.00
        Low
        1,612.65
        Close
        0
        Contracts Traded
        0.00
        Turnover (₹ Lakhs)

      Corporate Actions

      • Board Meeting

        Quarterly Results

        Oct 07, 2020

        Board Meeting

        Quarterly Results

        Jul 20, 2020

        General Meeting

        Book closure from Jul 31, 2020 to Aug 12, 2020

        Jul 16, 2020

      • Announced onMeeting on
        Oct 07, 2020Oct 21, 2020
        Quarterly Results
        Jul 20, 2020Jul 28, 2020
        Quarterly Results
        May 14, 2020May 20, 2020
        Audited Results & Final Dividend
        Jan 08, 2020Jan 24, 2020
        Quarterly Results
        Oct 11, 2019Oct 21, 2019
        Quarterly Results
      • Announced onEx-DateDividend%
        May 20, 2020Jul 29, 2020130%
        Apr 24, 2019Jul 10, 2019115%
        Apr 25, 2018Jul 10, 2018105%
        Apr 25, 2017Jul 10, 2017100%
        Apr 25, 2016Jul 04, 201695%
      • No Data Available

      • No Data Available

      • No Data Available

      • Announced onMeeting on
        Jul 16, 2020Aug 12, 2020
        Book closure from Jul 31, 2020 to Aug 12, 2020
        Jun 20, 2019Jul 18, 2019
        Book closure from Jul 12, 2019 to Jul 18, 2019
        Feb 25, 2019Mar 30, 2019
        -
        Sep 19, 2018Oct 24, 2018
        -
        Aug 30, 2018Oct 05, 2018
        -

      About

      UltraTech Cement Ltd., incorporated in the year 2000, is a Large Cap company (having a market cap of Rs 154951.84 Crore) operating in Cement sector.

      UltraTech Cement Ltd. key Products/Revenue Segments include Portland/Possolana Cement which contributed Rs 36602.92 Crore to Sales Value (90.04 % of Total Sales), Cement Grey which contributed Rs 3430.09 Crore to Sales Value (8.43 % of Total Sales), Other Operating Revenue which contributed Rs 550.72 Crore to Sales Value (1.35 % of Total Sales), Scrap which contributed Rs 64.87 Crore to Sales Value (0.15 % of Total Sales), Lease Rentals which contributed Rs .33 Crore to Sales Value (0.00 % of Total Sales), Sale of services which contributed Rs .24 Crore to Sales Value (0.00 % of Total Sales)for the year ending 31-Mar-2020.

      For the quarter ended 31-12-2020, the company has reported a Consolidated sales of Rs 12254.12 Crore, up 18.35 % from last quarter Sales of Rs 10354.21 Crore and up 18.35 % from last year same quarter Sales of Rs 10353.80 Crore Company has reported net profit after tax of Rs 1584.60 Crore in latest quarter.

      The company’s top management includes Mr.Arun Adhikari, Mrs.Sukanya Kripalu, Mrs.Rajashree Birla, Mrs.Alka Bharucha, Mr.S B Mathur, Mr.Kumar Mangalam Birla, Mr.K K Maheshwari, Mr.K C Jhanwar, Mr.Atul Daga, Mrs.Usha Sangwan. Company has Khimji Kunverji & Co. LLP as its auditors. As on 31-12-2020, the company has a total of 288,636,906 shares outstanding.

      About UltraTech Cem.

      UltraTech Cement Ltd., incorporated in the year 2000, is a Large Cap company (having a market cap of Rs 154951.84 Crore) operating in Cement sector. Show More

      Key Indices Listed On

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

      Address

      'B' Wing, Ahura Centre,2nd Foor,Mahakali Caves Road,Mumbai, Maharashtra - 400093

      Executive Leadership

      AB

      Alka Bharucha

      Independent Director
      AA

      Arun Adhikari

      Independent Director
      AD

      Atul Daga

      WholeTime Director & CFO
      KC

      K C Jhanwar

      Chief Manufacturing Officer
      Show More

      Auditors

      Khimji Kunverji & Co. LLP
      BSR & Co. LLP

      UltraTech Cem. Share Price Update

      UltraTech Cement Ltd. share price moved down by -3.01% from its previous close of Rs 5,534.80. UltraTech Cement Ltd. stock last traded price is 5,368.40

      Share PriceValue
      Today/Current/Last5,368.40
      Previous Day5,534.80

      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).

      DISCLAIMER: Any and all content on this website including tools/analysis is provided to you only for convenience and on an “as-is, as- available” basis without representation and warranties of any kind. The content and any output of such tools/analysis is for informational purposes only and should not be relied upon or construed as an investment advice or guarantee for any specific performance/returns advice or considered as recommendation for the purchase or sale of any security or investment. You are advised to exercise caution, discretion and independent judgment with regards to the same and seek advice from professionals and certified experts before taking any decisions.

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      Markets Data

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      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.