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The week beginning Monday, the 27^th March is Week 13 as per ISO numbering convention of the weeks of a year. Seasonality trading strategy involves studying Stocks and ETFs or any other underlying for strong seasonal behaviour so that we could trade the underlying in line with their seasonal behaviour for direction of the trade.

Country in focus:

This week we look at the Stocks from India in NIFTY 50 index.

Stock/ETF in focus:

Specific Stock in focus Hero MotoCorp Limited (Ticker: HEROMOTOCO). The Stock is listed in the National Stock Exchange (or NSE), trading currency being Indian Rupees or INR in short.

Trade Direction:

BULLISH, Seasonality study for last 10 years reveal 80.0% probability of success in a BUY (LONG) trade for this week (Week 13) and 100% probability for the trade next week (Week 14). Please see the Summary report screenshot later in the blog.

Overview:

Hero MotoCorp Limited manufactures and sells motorized two wheelers, spare parts, and related services in Asia, Central and Latin America, and Africa and Middle East. Hero MotoCorp Limited was incorporated in 1984 and is based in New Delhi, India.

It offers motorcycles and scooters. The company also provides engines, as well as related parts and accessories. It has a strategic partnership with Gogoro Inc. to enhance the shift to sustainable electric mobility in India. The company was formerly known as Hero Honda Motors Ltd. and changed its name to Hero MotoCorp Limited in July 2011.

(Courtesy: Yahoo Finance)

Sector and Industry Details:

Sector(s):                              Consumer Cyclical

Industry:                               Auto Manufacturers

Full Time Employees:        9,173

(Courtesy: Yahoo Finance)

Fundamentals:

52 Week Range       2,150.00 - 2,938.60

Avg. Volume             329,268

Market Cap              462.3B

PE Ratio (TTM)        17.89

EPS (TTM)                 129.32

Earnings Date          Feb 08, 2023

Ex-Dividend Date    Feb 17, 2023

(Courtesy: Yahoo Finance)

Current trading price:

As of Friday, close of 24^th March 2023, the stock was trading at 2,313.35. All prices are in INR.

SEASONALITY:

The stock demonstrated very strong SEASONAL move in week 13 of the year, here are the details of its SEASONAL behaviour.

Summary report: In 8 out of last 10 years in week 13, the stock was BULLISH with average move up (AMU) of 11.38% and average move down (AMD) of 5.37% for an average holding time (ADH) of 45 days. The worst-case average Reward-Risk Ratio (RRR) for all 10 trades over last 10 years was 1.58:1. See the summary report table below:

Detailed Report, Trade Performance: If only 1,000 stocks were bought in the beginning of week 11 every year for last 10 years, then a trader would have had a Gross Profit of INR25,20,850, Gross Loss of only INR48,150, making a Total Net Profit of INR24,72,700. No leverage applied.

In those 10 years, the Largest Win was INR6,14,850, Largest Loss was INR31,650, the Average profit/trade being INR2,47,270. Profit factor (quotient of Gross Profit and Gross Loss) being an astounding number of 52.35. All figures gross and excluding trading commissions or any brokerage fees. Please see the section of the detailed report below.

Detailed Report, Year by Year Trade Performance: Trades taken at the beginning of Week 13 for all years of last 10 years were winners, except for the year 2013 and 2015 in which there were small losses. Please see the section of the detailed report below.

Histogram Chart: The chart below shows the percentage moves of the underlying Stock of Interest in each of the years in the Seasonality analysis, for a quick visual clue of the year-by-year trade performance. There two RED bars in the histogram showing the loss in 2013 and 2015 among last 10 years.

Candlestick Chart: The candlestick chart of the underlying Stock/ETF’s latest performance in year 2022 is as shown below. In the web-based Seasonality trading application, the chart is available for all the years of the Seasonality analysis, in this case, all of the last 10 years.

Trade Structure:

If we had traded the Stock this week, then we would have structured the trade as follows:

The choice of RRR of 2:1 is in line with the average RRR from the last 10 trades in each of the last 10 years in Week 11, since 2013 till 2022.

Please note that the RoI of return on investment is 12% minus commissions and any other applicable brokerage fees. If it was a CFD trade, the investment would have been much less, thus making the RoI much larger than what is shown here. But also in that case, there will be additional CFD interests payable for the days the CFD position is held.

Further Information about trading applications:

Please visit the following URL for more information on various trading applications from Sapphire Capitals which are designed to deliver high probability trading opportunities for swing trading as well as for intraday trading:

https://www.sapphirecapitals.com/pages/swing-trading-stock-seasonality-strategy/

https://www.sapphirecapitals.com/pages/swing-trading-stock-price-action-strategy/

https://www.sapphirecapitals.com/pages/swing-trading-volume-spike-stock-trading-strategy/

https://www.sapphirecapitals.com/pages/day-trading-intraday-seasonality-trading/

Disclaimer:

Sapphire Private Assets (ABN: 34 613 892 023, trading as Sapphire Capitals) is not a broker or a financial adviser but an education and research organisation; we provide training and tools for traders and DIY fund managers for trading in global financial markets. The contents of the blog have been produced by using technical analysis and trading applications developed by Sapphire Capitals for the Stock and ETF traded worldwide. The contents of this blog are intended for education and research purposes only and is not a recommendation or solicitation to invest in any Stock or ETF.

For more details, please visit www.sapphirecapitals.com/Disclaimer.