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Technical Analysis

Author: Team Karvy/Friday, December 9, 2016/Categories: Stocks

Technical Analysis

TORRENTPOWER

TORNTPOWER has formed significant low of 66 in Aug’13, post which the stock witnessed a smart recovery forming higher highs and higher lows on the weekly chart in the last one year time frame indicating a secular uptrend in the stock. The stock has given breakout from inverted head and shoulder pattern on weekly line charts in the first week of November 2015 with good volumes indicating huge buying interest to come in coming days. We expect the stock to start a fresh leg of rally from these levels to the said targets.

Points of Observation

- On the weekly charts, the stock is trading above all of its short term and long term exponential moving averages, where as in daily chart the stock is trading above its 50/100/200 day EMA levels indicating the bullish bias in the counter.

- Among other leading indicators parabolic SAR is trading below the CMP and suggests a positive trend in the counter on daily charts as well as on weekly charts.

- Among the momentum indicators MACD is trading above the signal line in weekly charts indicating positive momentum in the stock on medium to long term perspective.

- The stock has witnessed little profit booking after it has given breakout from inverted head and shoulder pattern and retested its neckline and is now available at attractive price.

- On fundamental side, TORNTPOWER is one of the leading companies in the Indian power sector, engaged in generation, transmission and distribution of power, mainly catering in state of Gujarat. The company is expected to benefit from the government’s bailout plan for Discoms in coming days.


APOLLO HOSPITALS

APOLLOHOSP is in a uptrend from many months and every correction has proved to be a great buying opportunity. The stock has made a high of 1515.90 and from that point it has come to 1213 levels giving a correction of almost 20% from its high. The stock is trading above its 200DMA which is at 1326. The stock has major support levels in the range of 1240-1210.The stock made a low of 1213 on 16th November and showed smart recovery from those levels and is currently trading around 1350 levels. The next major monthly support is around 1100 levels which is also its previous breakout levels. The current correction seems to be almost over and the stock is likely to consolidate near its support levels and start its up-move in next few days.

Points of Observation

- On the daily charts, the stock is trading near its upward sloping trend line indicating the inherent strength in the counter and is likely to head northward towards its previous high in medium term. 

- The stock has been witnessing accumulation from the last 8-10 trading sessions near its support levels. The stock has a strong support at around 1200 levels and is likely to head towards 1500 levels, where it is likely to face some resistance. 

- Among oscillators, the 14-day RSI has crossed 50 levels, indicating the stock has strength and price can rise in medium term. 

- On weekly charts the stock has come to its previous support levels of 1200, and it is highly likely that it will take support at its support levels and once again move north wards. 

- The maximum correction in this stock for the last two times was in the range of 20%-25% in the month of April 2015 and August 2015 and post that the stock has touched its previous highs both the times. Even this time the stock has corrected around 20% from its high and is likely to go till its previous high.


CEAT LTD

CEATLTD is one of the leading tyre manufacturers in India, offering the widest range of tyres to leading OEM’s across the world. In the last month company posted quarterly results with rise in net profit primarily due to softening of raw material costs, however net sales remained down quarter on quarter basis. In the month of Oct’15 stock witnessed profit booking from life time highs and found a support above its major moving average. Currently stock is well poised to surge higher over coming weeks.

Points of Observation

- The stock price is in structural uptrend with intermittent profit booking, however in last two year time frame such intermittent price correction has provided an excellent opportunity to accumulate stock on dips. In last five months time frame stock witnessed smart rally from the lows of 595 levels to a life time high of 1319.90 posted only in month of Oct’15, wherein from stock price plunged on account of profit booking.  On applying Fibonacci Retracement from the low of 595 to life time high, 50% retracement lies near 957 levels-in recent past stock bounced back after placing a swing low of 958.10, validating retracement support.

- Currently stock is holding above its 200-DEMA (944) and likely to find support on any price correction, and momentum oscillator on weekly time frame is poised in bullish territory, indicating buying opportunity for medium term investment.

- Therefore, we recommend accumulating stock near 1030 levels, and any dip towards its 200-DEMA 945 levels can be utilized to average the stock price, for initial target of retesting of its life time high of 1320 mark and eventually stock may surge higher in an uncharted territory towards 1360-1380 levels, keeping stop loss below 885 levels. 


LARSEN & TOUBRO LIMITED

LT is India’s largest and the most respected engineering, construction, manufacturing and financial services conglomerate, with global operations. The company is well positioned to benefit from economic recovery and it remains best proxy for Indian Infrastructure development story. With its strong business model, strong execution capabilities and healthy balance sheet. L&T addresses critical needs in key sectors - Hydrocarbon, Infrastructure, Power, Process Industries and Defence - for customers in over 30 countries around the world.

Points of Observation

- The stock has resumed its up move from the low of 677 levels which has placed the stock to the high of 1894 levels. Thereafter, the stock has seen sharp cut from the same and made a bottom around 1326 levels. However, the price action on the weekly charts has formed bullish engulfing pattern last week with notable volume which suggests trend reversal of the recent down trend stared from the high of 1894 levels is fizzled out and stock may take it up move from the current levels.  

-The recent fall in the stock from the high of 1894 levels has placed the stock below all medium to long term moving average. Currently the stock is consolidating in the range of 1330-1365 levels from couple of weeks with considerable volumes which suggests strong hands are accumulating the stock at lower levels. 

- Parabolic SAR has recently triggered a buy signal on the daily charts and was trading well below the price reflecting strength in the counter. Hence we suggest buying the stock on a minor dip to 1340-1350 levels keeping stop loss of 1050 levels for the target of 1800- 1830 levels in a time frame of 6- 7 months.


MARKSANS PHARMA LTD

​MARKSANS is among the few mid-cap Pharma companies which have been growing steadily in the last couple of years. The stock has risen very sharply in its current bull trend which started from around 10 levels in the year 2013 and its strong uptrend is still intact. The stock has given a significant return in last one year when the stock rallied from around 60 levels towards 115 levels, almost doubling in the said time frame. Profit booking was witnessed in the stock at the higher levels which dragged the stock towards 74 levels, where the stock took support and bounced back sharply towards 111 levels. The stock has been trading in a broad range of 90-105 levels since last one month. It seems that the stock has bottomed out and is ready to move higher. Any further decline in the stock towards 80 levels can be used as a buying opportunity to accumulate the stock for the targets of 140-155 levels in the short to medium term.

Points of Observation

- On the daily charts, the stock is trading above most of its major moving averages namely 21/50/100/200 –DEMA, indicating the inherent strength in the counter and is likely to head northward towards 140-155 levels in the short to medium term. 

- The stock has seen accumulation at the lower levels around 90-95 levels when stock fell from its recent highs of 111.20 during the last month on account of profit booking. Since then the stock has been gradually falling and has taken support around its 100-DEMA. The immediate support for the stock is seen to be around 95 levels. 

- Among oscillators, the 14-day RSI line is pointing northwards, indicating upside in the counter.

- The price of the stock is trading on the Parabolic-SAR indicator indicating that the correction in the stock is over and the counter is likely to resume its upward trend and trade in the uncharted territory. 

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Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.