TA Case Study: Kaynes Technology Ltd.

Trade Analysis #3: Peek into my Trade Journal

What this is not:

This post is not an advice or recommendation. 

What this is about:

While decisions are taken in real time, I am trying to better understand my trades. Going back in time, I/m looking for inherent weaknesses in my trading. Let my trading be an open book. 

Note: This is an open trade. Will keep on updating

Company Brief

Kaynes Technology Ltd - It is an ESDM (Electronic System Design and Manufacturing) company. Caters to various sectors like automotive, industrial, aerospace and defense, outer-space, nuclear, medical, railways, Internet of Things ("IoT"), Information Technology ("IT") and other segments.

IPOed in November 2022

(1) Initiation of Position at ATH

New Sector. Government Push. Had performed extremely well 3.75x since IPO. Touched ATH.

In hindsight, it is a Hammer Candle. At the time of purchase, it was solid green.

We don't make decisions in hindsight. Decisions are taken in real-time.

(2) 13-Feb 2024 Breaching EMA 50 Daily

Caught in the volatility once again. It triggered the SL. In hindsight, it was a shakeout.

Learnings from this short-lived trade:

(1) Don't chase...I bought at ATH. You don't have to buy the absolute ATH. Rather buy after breakout from a reasonably tight area. There was an entry point few days back. My buy point was extended and was rejected the same day. 

(2) More important than entry point is the risk management part. The EMA 50 was staggering 20% far away. 1.5% position on a 20% SL means the risk on trade was 0.3% of portfolio.

(3) Though the overall risk to the portfolio was not enormous given the small position size, the risk-reward wasn't great. What was I thinking??

Carried away with FOMO  

(4) The Initial entry has proved that it was not worthwhile to stay put after 8% fall after entry. Why I didn't exit.

(i) I don't prefer an intra-day trade as it goes as speculation and can't use it to offset short term capital gains

(ii) Complacency set in as it was a tiny position.

Only good thing was that I respected the EMA 50. Even it was a small position I exited when the SL triggered and position size was in consonance with risk tolerance.   

(3) Re-entry at ATH 26 Feb 2024

Kaynes made an ATH on 26 Feb. It’s important to note that it had crossed the resistance level which was touched multiple times but had failed to cross.

SL at EMA 50 again i.e. around 9%. Hence the risk of the trade at the portfolio level was 0.5%.

Here again the same behaviour after ATH. Couldn't sustain...back in base

Why it was not sold - The base was tight and felt like it need more time in the base

(4) Stopped out again - 12 Mar 2024

12th March 2024: Breached the shakeout low

SL was moved up to Shakeout low. Basically, the stock had reversed sharply after breaching EMA 21. Hence upped the SL.

SL was again triggered.

(5) Post Earning Drift (Gap up after results) + Launchpad

17th May 2024

Kaynes gapped up after blockbuster results. Converging MAs + Gap + High Volume.

This is essentially a launchpad setup whereby the Moving averages converge and stock opens gap up. Here it was triggered by the results and hence it is Post Earning Drift as well.

The position was initiated again at 2915 (progressive exposure - bought on same day in parts).

4.66% Position Size at SL of 9% (Gap low). Hence the position again was at 0.4% risk on the total portfolio.

Blockbuster results

(6) 23th May 2024 - Fundamental ADD post reading concall

1.34% position at 3350. Total position size at even 6%. SL also moved to 3100.

Technically was an inside bar.

(7) 04th June 2024 - Election Volatility

Barring the fire sale on 4th June, Kaynes was now on track. I was fundamentally convinced.

In my personal view, when a company is growing fast like Kaynes did (50%+ growth), it is futile to look too much into valuations. Rather, focus on antithesis. What can make the growth falter?

Added a nominal 1.5% position at 2815 (at Lower Circuit).

Lot of uncertainty. At that point...No idea what the next day would bring.  

(8) 5th July 2024 - Tranche at ATH

New ATH after 4th June was too quick. couldn’t capitalize on the opportunity on 11 June.

Added 3.3% at 4165 on 05 July. Total position now at 10.74%.

(9) Fast Forward to 29th July 2024

Learnings So Far

(1) Don't Chase - This is easier said than done. However, I am pursuing for better emotional control.    
(2) Risk Management is paramount. Never risk what could do significant damage to your portfolio. I prefer risking in the range of 0.25% to 1% of my portfolio on one trade. Typically the risk is 0.5% of portfolio/trade.
(3) Just because you have been shaken out of stock, don't take it out of watchlist. Here the entries were not perfect, luckily I was able to get in the trade.

Let's see how this trade progresses.

What are your thoughts on Kaynes ? (Leave a comment below)

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Disclaimer: I am not SEBI registered. The information provided here is for educational purposes only. This is not a buy or sell advice. I will not be responsible for any of your profit/loss based on the above information. Consult your financial advisor before making any decisions.

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