Everyone dreams that they are owing the stock that multiplies their money many times. Turing small investment into life changing returns, it is not luck it includes discipline, patience and right handwork.
In the Indian stock market, we all are seen stocks which are multiple deliver extraordinary returns over a long years, there stocks are commonly called as multibagger stocks. but the real challenge is not founding those multibagger stocks , so in this article we will decode the How to Find Multibagger Stock with Technical Analysis before they become more famous.
Most of the retail investors ask the same questions again and again
- Can Multibaggers be found from Research Reports?
- how to find multibagger stocks with technical analysis?
- How to find multibagger stocks?
- How to find multibagger stocks in India?
This article will answer the all these questions in simple and realistic without false promises.
Important disclaimer – This content is only educational and informational purposes. it is not financial advice, always do your own research or consult registered financial advisor.
What is Multibagger Stock?
Multibagger stock is a stock that gives multiple times returns on investment over a time.
Example
- 2 times stock doubles your money
- 5 times stock return means ₹1lakh into ₹5lakhs
- 10 times stock turns means ₹1lakh into ₹10lakhs
Mean while in Indian companies like Titan, Bajaj finance, Asian Paints, Page Industries and mid cap and small companies stocks have delivered multibagger returns.
but here is the most important point is multibagger stocks are not create in overnight.
Biggest Misunderstanding About Multibagger Stocks
Many retail investors Believe :-
- Multibagge are purely luck
- You need fundamental Knowledge only
- trader to technical analysis to do trading only
But
- Big investors leaves footprints on charts
- Institutional investors accumulate stocks slowly
- Technical analysis helps to identify the early trends
- Research reports helps for trade conformations not to predict the future growth
understanding how Can Multibaggers be found from Research Reports? gives retails investors fair chance to participate early.
Why Technical Analysis Critical for Finding Multibagger
Fundamental analysis tells you what to buy, Technical analysis tells you where to buy and when to buy and also when not to buy.
Sometimes best company can give poor returns why :-
- When you buy at wrong price
- When you take position while distribution
- Trends weak or sideways for years
Technical analysis helps :-
- Is smart money going towards stocks
- is long term trend changing
- Is is accumulations or distribution
- is move is sustained move or fake momentum
This is why how to find multibagger stocks with technical analysis? learning is essential for long term.
Understanding the Life of Cycle of a Multibagger Stock
Generally every stock passes though major phases
Phase 1 :- Accumulation phase
- Price continuously moves sideways for months or years
- No Volatility
- Media coverage is very minimal
- Retail interest is almost zero
Phase 2 :- Breakout phase
- Stock breaks long term sideways zone
- Volumes expand significantly
- Trend shifts from sideways to one direction
- Early investors start noticing
Phase 3 :- Expansion Phase
- You can see higher high or higher low patterns in charts
- One side strong moments
- Analysis initiate coverage
- Slowly News flow increases
Phase 4 :- Distribution Phase
- Sharp volatility
- smart money exits
- retails investors participation will peak
Technical analysis helps you focus on phase1 and phase 2 where multibagger stocks begin.
How to Find Multibagger Stock with Technical Analysis
If you want to find multibagger stocks in India, daily charts are not decider
Multibaggers are long term wealth creators
Best time frames
- Weekly charts to trend structure
- Monthly chart to long term approach
Daily charts are useful only in daily bases trades but not finding multibaggers stocks
Step 1 :- Look for Long Term Consolidation
One of the strong technical analysis is a future multibagger is long consolidation
- 1 -3 years of sideways movement
- Narrow price range
- No break outs
- Slow volumes
This is indicates Many Indian multibagger stocks in this zone in years nothing will do before upwards.
Step 2 :- Strong Base Formation is Non – Negotiable
The logger base has stronger base in future move
Features of the strong base :-
- The price respects the support levels
- Failed breakdown attempts
- Recovery after dip
Step 3 :- Breakout with Volume is Real Signal
Breakout without the volume is irregular, one of the golden rule of technical analysis is
price will tell you how strong volume is.
General Breakout Conditions :-
- Breakout after many years consolidation
- When volume above 2 time or 4 times average
- Weekly close above resistance
- When signal shows institutional entry
Step 4 :- Moving Average Confirm Long Term Trend
Moving average will advise you to stay in the right side of the trend
Important Moving Average Levels
- 50 EMA
- 100 EMA
- 200 EMA
The multibagger structure Levels look like :-
- Price above 200 EMA
- 50 EMA above 200 EMA
- Pull backs appears in support levels
Step 5 :- Relative Index Strength (RSI)
Most unrated and powerful concept of future multibagger usually :-
- Out performs NIFTY and SENSEX
- Fall very less during the corrections
- Recovery faster than the market
note if the stock not beat the index it will not become leader, the strong stocks will not depend on index.
Step 6 :- Sector Strength Turns into Returns
Always select the strong sectors because multibagger will not comes from week sectors. before picking the stocks ask you self :-
- Is sector in a good performing or uptrend?
- Is money going towards to the industries?
- Is multiple or existing stocks breaking out together?
In India Multibagger Stocks Comes from Sectors like :-
- Finance
- IT
- FMCG
- Pharma
- Auto Motive
Can We Found Multibaggers from Research Reports?
Answer for this common question is YES! but not directly, research reports did not create the multibaggers they helps you to understand and validations.
Why Research Reports are Good –
- Business understanding
- Industry current flow
- Growth assumption
- Management commitment
- Long term visibility
Research Reports are Not –
- guaranteed predictions
- Buy and sell conformation
- Trading position tools
What is The Right Way to Use Research Reports
Focusing on target price is only big mistakes what retail investors makes,
What should we focus instead of target price
- Revenue growth assumption
- Margin increase expectation
- Capital allcation
- Industry Policies
What is Most Powerful Combination while Picking Multibagger
When we Combine Technical analysis and research reports results will be powerful way to find the multibagger stcoks.
- Shortlist stocks using technical analysis
- Identify consolidation and breakout patterns
- Confirm trend strength
- Read research report for valuation
Risk Management for Multibagger Stocks
Even the best company can fail that’s why,
- Never invest all your capital in one stock
- Use position sizing
- Losses are part of the process
- USe Future Value of Stock Price Calculator
- Use Stock Market Sentiment Meter
- buying after massive rallies
- ignore the volume
- Expecting quick results
What are the Most Realistic Expectations You Must Have
- Out of 10 stocks 5 may fail
- 3 may give average returns
- 1 or 2 may become wealth creator
that’s why invest more than long term wealth.
Conclusion
Multbagger are found where strong chart patterns and improving business growth, always remember long consolidation, strong base, breakout with volume, relative strength and research report validation. so hope this article answers all questions like How to find multibagger stocks, How to find multibagger stocks in India, How to find multibagger stocks with technical analysis and Can multibaggers be found from research reports. finally this article is strictly for educational and learning purpose, we are not SEBI register advisors. no buying and selling recommendations do research before taking financial decisions.
