Will INR hold this new downturn in sector?.
From a weekly perspective, INR had a decent drop from 16.5 to 14.5, volume usual.
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So what is happening in INR? Playing extremely weak. After reaching 32.5, now racing towards its 52 week low of 10.5..
Looking at 3 major major factors in play- Li macros - This is in decline. All jurisdictions in decline for last few weeks
- ASX Li play - ASX Li stocks were in clear divergence before, now that divergence is getting narrower. Unfortunately, not by the path that ASX Li stocks are gaining and bridging the gap, but US/Chinese Li stocks dropping big time
- INR Play - For INR, it needs a play like PMT, something out of the box, otherwise it may just follow macro, play like other ASX Li stocks
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INR play is weak. It is just following the Li macro, the ASX Li macro, and playing weak. From a numbers perspective, it is a steady decline, now every week. If it continues 10.5 may come into picture. Its already reached 14. Upside, anything below 20 may not give a lot of confidence.
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Last few weeks I have been talking how ASX stocks (Li/U ) playing weak compared to other jurisdictions. The good play, of ASX gaining has not happened. ALB has now dropped over 20% from its recent high of 113.91. Ganfeng has now dropped over 20% from its recent high of 45.30. Both looking very vulnerable, and more importantly at a very critical juncture. If they continue to drop, it will be another calamity for ASX Li stocks - new lows will be made. Nearly most ASX Li stocks have made a new 52 week low in recent times. That play may continue. So what can stem that rot? Both ALB and Ganfeng need to hold here. In a blink ALB can drop below 80, and Ganfeng can get to around 30. Big stocks like PLS/LTR etc making new 52 week lows, and dragging a lot of other LI stocks in making 52 week lows.
So what play should we expect for any positivity?
- ALB - first level is 92/94. It needs to go there, soon, maybe tonight, or at least close to it. That will be 30% from its lows. But more importantly, that was a well traded zone which ALB held very well before. Then only it went to 113. But this week, already down over 10% with play pending for tonight.
- Ganfeng - first level is around 38, it needs to get to around 38. It is still doing well. But around 38 will mark around 50% up from its lows. That will be positive and keep the hope alive. Ganfeng down around 3% for the week. So not a very bad play, the best hope at this stage.
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Personally, last week I had written that I had got out of most of my Li stocks, those that I picked 2 weeks back. Early this week I exited most. Last week I had exited most at break even, this week a small loss. INR I wrote last week that I had exited some at break even around 17/17.5, all the new buys I had done. Still hold some before, which I am down. But I have bought today, again, at 14/14.5. Wasn't very confident, but lets see. I don't know, today again I felt that there may be a bounce in sector - 50/50 chance. Have taken a punt and bought a fair few Li stocks today. But have only bought one-third of what I want to buy. Will see ALB play tonight. If its in red, I may exit on Monday, break-even/slight loss. But if its green and regains 92/94 level, I may add another one-third soon.
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So what may happen next week? Very uncertain state. Very concerning as well. It needs to hold here. Otherwise big trouble. No Santa rally till now, instead going in opposite direction. But things can change. I feel we are vey close to the bottom of this phase. But best not to assume anything. Follow price action. The good time could start with ALB gaining 92/94 level tonight. Will that happen? Lets hope so. Enjoy your weekend and all the best
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