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The week beginning Monday, the 15^th May is Week 20 as per ISO numbering convention of the weeks of a year. Seasonality trading strategy involves studying Stocks and ETFs for historically strong seasonal bullish or bearish moves that we could use to open a BUY trade and profit from the bullish move or a SELL trade from a bearish move.

Country in focus:

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

Stock/ETF in focus:

Specific Stock in focus Hindustan Unilever Limited (Ticker: HINDUNILVR). The Stock is listed in the National Stock Exchange (NSE) of India, the trading currency being Indian Rupees or INR in short.

Trade Direction:

BULLISH, Seasonality study for last 10 years reveal 100.0% probability of success in a BUY (LONG) trade for this week (Week 20) and 90% probability for the trade next week (Week 21) and two weeks thereafter.

Please note that probability is not certainty. Although, historically, the Stock was bullish 100% of the time in Week 20, but there is always a probability that the Stock do not perform as per historical patterns. As such, always trade with strict money management principles such as allocation of a portion of the trading capital and use a guaranteed stop in the event the Stock price makes an adverse move.

Please see the Summary report screenshot later in the blog.

Overview:

Hindustan Unilever Limited, a consumer goods company that manufactures and sells home and personal care, food, and refreshment products in India and internationally. The company was founded in 1888 and is headquartered in Mumbai, India. Hindustan Unilever Limited operates as a subsidiary of Unilever Plc.

The company operates through Home Care, Beauty & Personal Care, Foods & Refreshment, and other segments. The Home Care segment offers detergent bars and powders, detergent liquids, scourers, water business, purifiers business, etc. The Beauty & Personal Care segment provides oral, skin, and hair care products, as well as soaps, deodorants, talcum powder, colour cosmetics, salon services, etc. The Foods & Refreshment segment provides culinary products, such as tomato-based products, fruit-based products, soups, etc., as well as tea, coffee, health food drinks, ice-creams, and frozen desserts. The Others segment engages in export and consignment sales activities. The company also engages in the beauty salons, job work, discharge trust, and real estate businesses.

(Courtesy: Yahoo Finance)

Sector and Industry Details:

Sector(s):                              Consumer Defensive

Industry:                               Household & Personal Products

Full Time Employees:        more than 21,000

(Courtesy: Yahoo Finance)

Fundamentals:

52 Week Range       2,100.00 - 2,741.60

Avg. Volume             1,443,803

Market Cap              6.164T

PE Ratio (TTM)        60.81

EPS (TTM)                 43.14

Earnings Date          Jul 17, 2023 - Jul 21, 2023

Ex-Dividend Date    Jun 19, 2023

(Courtesy: Yahoo Finance)

Current trading price:

As of Friday close of 12^th May 2023, the stock was trading at 2,623.40. All prices are in INR.

SEASONALITY:

The stock demonstrated very strong SEASONAL move in week 17 of the year, here are the details of its SEASONAL behaviour.

Summary report: In 10 out of last 10 years in week 20, the stock was BULLISH with average move up (AMU) of 10.48% and average move down (AMD) of -2.62% for an average holding time (ADH) of 49 days. The worst-case average Reward-Risk Ratio (RRR) for all 10 trades over last 10 years was a whopping 3.38:1. See the summary report table below:

Detailed Report, Trade Performance: If only 100 stocks were bought in the beginning of week 20 every year for last 10 years, then a trader would have had a Gross Profit of INR1,38,515, Gross Loss of INR0, making a Total Net Profit of INR1,38,515. No leverage applied in the numbers above.

In those 10 years, the Largest Win was INR33,000, Largest Loss is not applicable as there were no loss in last 10 years, the Average profit/trade being INR13,852. Profit factor (quotient of Gross Profit and Gross Loss) being Infinity because there we no losses in last 10 years and the denominator in the quotient being zero (anything divided by zero results in Infinity!). All figures are 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 20 for all years of last 10 years were winners. In the table below, notice the very significant seasonal move in each of the years over last 10 years.

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 is only GREEN bars as there were no losses in last 10 years.

Candlestick Chart: The candlestick chart of the underlying Stock/ETF’s latest performance in year 2021 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 the last 10 years.

Trade Structure:

If we had traded the Stock this week, then we would have structured the trade as follows, as a straight Stock trade and without any leverage unless offered by the broker. Traditional CFD trading is not available in India:

The choice of RRR of 3.33:1 is in line with the average RRR from the last 10 trades in each of the last 10 years in Week 20, since 2013 till 2022.

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.