This is not a recommendation. It is a description of how I approach certain setups. This may not suit all investors.
Most investors look for breakouts. Stocks making new highs, momentum building, volume surging.
I look for the opposite. I look for range-bound PSU stocks specifically.
My approach is built around one insight — PSU stocks often show more predictable behaviour compared to other sectors. And that predictability creates repeatable opportunity.
Why PSU Stocks Specifically
PSU companies are government backed, cash generating businesses with a structural mandate to pay dividends — because that dividend is direct income for the government. They are strategically important and closely linked to government policy — too important to ignore and too boring for most people to follow closely.
That’s exactly why they work for this approach.
When a policy change hits — retail investors panic and sell. When a re-rating narrative emerges — they chase and buy. The stock often swings between fear and greed within a broad range.
We don’t react. We wait for the range to form and then we act.
The First Filter — 52 Week High vs Low
The first thing I check is simple. Is this stock making higher highs or lower lows?
If yes to either — it’s not for me. A stock making higher highs has momentum and belongs to a different system. A stock making lower lows has a broken thesis and belongs nowhere.
What I want is a range-bound stock stuck in the middle. No new highs. No new lows. Just cycling.
The Second Filter — The Fall
Once I find a range-bound stock going nowhere, I check how far it has fallen from its recent high.
The sweet spot is a 20-30% fall from the high.
Less than 20% — not enough fear in the market yet, valuation hasn’t compressed enough to give me a margin of safety.
More than 30% — something may be fundamentally wrong, requires deeper investigation before entry.
20-30% off the high on a PSU with intact fundamentals is where I look first.
The Third Filter — Sideways Movement and Volume
This is where most people get confused.
After the fall I want to see the stock go sideways. No dramatic moves. Just quiet trading in a tight range. And critically — I want to see volumes slowly declining during this phase.
Most people think low volume is a warning sign. For me it’s the green signal.
Here’s why — declining volume on a PSU means people have lost interest. The panic sellers have sold. The momentum chasers have moved on. Nobody is watching.
That’s exactly when the setup is forming.
PSU stocks can sometimes offer multiple opportunities in a year — but only when the setup is clear and conditions align. Low volume sideways action is that build up happening in real time.
The Entry — Staggered, Not All In
Once the setup is confirmed — 20-30% fall, sideways action, declining volumes — I enter. But not all at once.
Say I have ₹1 lakh allocated to a position. I deploy ₹30,000 first.
If it runs 20% I exit half and book the gain. If it comes back to the range I buy ₹60,000 worth. Now I have a larger position at a better average with partial profits already banked.
If it stays range-bound even after the first 20% move and forms a new base at a higher level — I look for a fresh entry there too.
The position builds itself through the range.
The Math Behind The Approach
Everyone chases the 10x stock. The multi-bagger that changes everything.
20% gain five times on the same stock is how I think about compounding. Not a promise — a framework. The idea is not to chase a single large move but to capture smaller repeatable opportunities when they appear and conditions are right.
PSU stocks can sometimes offer this kind of opportunity if you’re patient enough to wait and disciplined enough to act only when the setup is clean.
What Kills This Approach
Two things break it completely:
Leverage — if you’re borrowing to buy, the sideways phase will shake you out before the move happens. This approach only works with capital you can afford to sit on.
Impatience — the setup takes weeks sometimes months to form. If you need action, this isn’t for you.
The NoTradeZone Principle
The name of this site exists for a reason.
Most of the time — PSU stocks are in a no trade zone. Too high to buy, too early to sell, no clear setup forming.
We wait. We watch. We act only when the range confirms itself.
That discipline — doing nothing until the moment is right — is the entire edge.
Related Reading
→ Why I Limit Myself to 10 Positions — And Why Even That Might Be Too Many
→ The NoTradeZone Methodology — How I Think About Entries and Exits
→ IOC — Journal Entry — Entry Thesis April 2026
→ ITC — Journal Entry — Entry Thesis May 2026
About the Author
Jonathan — Endurance athlete. Investor by discipline. I document real trades in real time — entry prices, thesis, risks and honest updates. No tips. No calls. Just disciplined thinking, publicly archived.
All views expressed are personal. This is not investment advice. Please consult a SEBI registered advisor before making investment decisions.