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Technical Analysis

Author: Team Karvy/Thursday, November 5, 2015/Categories: Stocks

Technical Analysis

ASTRAZEN

ASTRAZEN surged over 62% from its 52 weeks low and is showing a strong up trend. During this uptrend the stock has formed a pole and flag pattern and witnessed strong consolidation between 16th June 2015 and 16th October 2015 for which it have  given breakout supported with good volume indicating a continuation rally for the pattern. Based on this we expect the stock to start a fresh leg of rally from these levels to the said targets.

Points of Observation

- On the daily and weekly charts, the stock is trading above all of its short term and long term moving averages, indicating the bullishness in the counter and any dip towards the pattern breakout region can be used as averaging opportunity.

- The stock has seen fresh accumulation in last couple of session indicated with steep rise in price along with the increase in the volumes. The stock has immediate strong support paced at 1100 levels and the uptrend is expected to continue in the stock till its stays above the 1550-1580 levels.

- It is observed in Bollinger bands on monthly charts the price has moved above the middle band and is moving along with the upper band with expanding bands indicating a medium to long term rally in the stock.

- Among oscillators, RSI on weekly chart is trading at 69.02 and is pointing northwards and the MACD line on daily chart is trading above the signal line with, indicating the strength in the counter and possibility of strong uptrend.


TATA ELXSI 

The monthly chart structure the stock, suggests formation of cycles of higher highs and higher lows, supported by good volumes in the last two years, clearly indicating there is a lot of demand for the stock even at higher levels which is a positive sign in itself. Tata Elxsi is in a structural uptrend and looks well set to march steadily towards the Rs 2600-2800 mark over the next 9-12 months. The stock has been relentlessly rallying from its September, 2013 low of Rs 156.55 to a lifetime high of Rs 2317.40, which was clocked in the month of August, 2015. The stock also broke out above its previous resistance at Rs 400 in December, 2013. In the chart above, it is clearly seen that the stock also witnessed superb accumulation within a broad range of Rs 1200-1800 during September quarter of this year as well. Considering the fact that the stock has zoomed more than 3 times within a period of just more than a year, and the momentum suggest the stock can witness similar kind of the move in the coming months as well.

Points of Observation

- On the daily charts, the stock is trading above all its short term and long term moving averages, indicating the bullishness in the counter and any dip towards the moving averages can be used as buying opportunity.

- The stock has seen fresh accumulation in last couple of quarters indicated with steep rise in price along with the increase in the volumes. The stock has immediate strong support paced at 1700 levels and the uptrend is expected to continue in the stock till its stays above the 1200 levels.

- Among oscillators, the 14-month RSI line is trading just a wee above the signal line pointing northwards and the MACD line is trading in the positive territory for the last seven quarters, indicating the strength in the counter and any dip can be used for fresh accumulation.

- We therefore recommend long term investors to go long in the stock around Rs 1800, and average the long position on dips, if any, around the level of Rs 1450 for the mentioned target levels with a strict stop loss placed below the level of Rs 1190 on a weekly closing basis.


CESC Limited

CESC Limited is fully integrated electrical utility serving over approx 2.8 million consumers. They are exclusive distributor of electricity within an area 567 sq.km of Kolkata and Howrah which include domestic, industrial and commercial users. CESC is one of the outperformer for the last 30 days and generated 9.1% whereas CNX INFRA index generated only 2.6% during the same period.

Points of Observation

- The stock has given breakout from 560 levels on daily chart and has already tested its breakout level which is indicating an overall strength in the counter. The stock witnessed profit booking from 827.45 levels to 477.85 levels which is also a 61.8% Fibonacci retracement support level drawn from 271.50 to 827.45 levels on monthly chart.  The stock has also taken support and respected its 200 Week EMA (484.30 levels) on closing basis and moving towards its previous swing high near 800 levels.

- The counter is trading with bullish bias and is hovering in between its short & medium term moving averages. Among indicators, the 14-month RSI line is trading above the 9-day EMA signal line pointing northwards and, In monthly chart, the Bollinger Band (20, 2) is also trading with positive bias and Average true range of the stock is decreasing which enhance its bullishness.

- Considering the above data facts, we are expecting the stock is likely to test 750 to 770 levels in medium to long term any bounce back towards 540-545 can be used for accumulate the stock for given target and stop loss.


MPHASIS

MPHASIS has posted surprise quarterly numbers on both the top line and bottom line front for the quarter ending Sep 30 2015. The company has reported 4% growth in sales, 18% increase in PAT and 92 basis points increase in EBITDA margins on quarter on quarter basis. The stock also has clocked fresh 52 weeks high in last trading session. MPHASIS is one of the outperformer in CNX 500 with a gain of 10.42% for the month as on date, while the index has gained only 3.71% during the same period.

Points of Observation

- The stock has been consolidating in a broad range of 350-450 over last few months and closed at the highest point of the range and is also on the verge of break out of the said range with huge volumes on back of positive news flow.

- Adding to the bullishness, the stock has an unfilled gap up (can be termed as break away gap) in the range of 417-426, which can act as a strong support for the near term.

- With the recent up move, the stock has moved above its all short to long term moving averages on daily charts, which supports our bullish view on the stock.

- Even the expansion of Bollinger bands on daily chart suggests the increase in volatility and possibility of the continuation of the current up trend.

- On the indicator front, the 14-day RSI is trading near 65 and the RSI line is also above the 9-day EMA signal line pointing northwards and, the MACD line is trading in the positive territory, reflecting the positive sentiment in the counter.

- Hence for the near term we expect the stock to achieve the consolidation range break out target of around 550.


DLINKINDIA

DLINKINDIA is a global leader in the design, manufacture and marketing of advanced networking, broadband, digital, voice and data communications solutions. The company is a key market player with a nationwide reach, robust product portfolio and superior services in India. It is engaged with distribution of Wireless Networking, Cable/DSL Routers, 3G Mobile Routers, Cable/DSL Modems, Switches, Network Adapters. The company may be directly benefited with PM Modi’s digital India Initiative, where its product line facilitates the digitization process.

Points of Observation

- The counter is in structural uptrend making higher highs and higher lows on the daily charts. The stock had made a spectacular run from the lower levels of 30 to all time high levels of 251.80 in just a small time frame of one and half year. After the said stellar rally, the counter witnessed a round of profit booking which dragged the stock towards the levels of 150. The stock later consolidated in the range of 150-180 for few trading weeks and formed a good base around the same. This correction in the counter should be utilized as a good buying opportunity for the medium to long term investors. 

- The counter is trading with bullish bias and is hovering in between its short and medium term moving averages. Among indicators, the 14-day RSI line is trading above the 9-day EMA signal line pointing northwards and, the MACD line is trading in the positive territory, reflecting the positive sentiment in the counter.

- Considering the above data facts, we expect the stock to continue to again restart its bullish trend from current levels and may test 235-240 levels in 9-12 months time frame. Any dips towards 158 levels may be utilized for adding further with stop loss placed below 138 levels.

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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.