Trade with Behavioural Finance Rules: Taking Benefit of The Representative Bias in Housing Sector

Trade with Behavioural Finance Rules: The Representative Bias in Housing Sector

LIC Housing Finance is on a roll and making new highs. While I am writing this it is close to crossing 1000 price level mark.
Now According to Cognitive Biases/Behavioural anomalies/pscycological anomalies/irrational behavoiurs; investors tend to take one or some stocks to be representative of the whole sector and think the laggards or smaller companies’ stocks will follow the leader.
LIC housing is the Leader in housing finance pack. It has already witnessed a huge run up and strong momentum and likely to continue to do so.
Now, let’s take a look at other
Gruh finance:
This counter is a majority subsidiary of HDFC.
It has witnessed a huge and sudden run up from 200 levels from where it consolidated and shot up upto 326.
At CMP 292, it is a BUY according to Behavioral Finance Analysis.
Targets cannot be given, Just Exit at your ease and return.
Another Housing stocks are,
Dewan Housing finance, Strong Buy at CMP 237, This stock has just started rising from 200 levels. Upside potential is tremendous.
Ind Bank Housing, 22 Rs. We don’t recommend this counter over Gruh Finance and Dewan Housing.

Disclosure:Our members hold shares in Gruh Finance and Dewan Housing.