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Technical Analysis

Author: Team Karvy/Monday, September 7, 2015/Categories: Stocks

Technical Analysis

INDUSINDBK

INDUSINDBK had been making repeated cycles of higher highs and higher lows on the weekly and monthly charts. The counter had been an outperformer in the overall banking space. The stock made a life time high of 989.30 levels in the month of July 2015 and a witnessed a round of profit booking towards the levels of 850-855 on the lower side. We expect the recent correction in the counter is an excellent opportunity to the medium to long term investors to accumulate the stock at current levels and add more around 820 levels with stop loss placed below 780 levels for the potential upside targets of 1100-1120 levels. 

Points of Observation
After witnessing a round of profit booking from all time highs,  the stock had made an attempt to take support around 850 levels which also co-insides with its 61.80% (Golden Ratio) Fibonacci Retracement drawn from the swing low of 784 to all time high of 989.30 levels.
On the monthly charts, the stock gave a breakout above 875 levels in the month of July 2015 and made a fresh all time high. Currently, the counter had again retested the same levels and is all set to trend higher taking support around the same.
The counter is trading well above its 200-DMA affirming that the stock is still in the bullish trend and may move higher in the coming months as well.
We expect the stock to enter the magical four digit number and may test 1100-1120 levels in coming 9-12 months of time period.


Advanta

The monthly chart structure of this fundamentally strong stock, suggests formation of cycles of higher highs and higher lows, supported by good volumes in the past five months, clearly indicating there is a lot of demand for the stock even at higher levels which is a positive sign in itself. Advanta is in a structural uptrend and looks well set to march steadily towards the 720-750 mark over the next 9-12 months. The stock has been relentlessly rallying from its February, 2014 low of Rs. 99 to a lifetime high of Rs.594, which was clocked in the month of April, 2015. The stock also broke out above its previous resistance at 235 in May, 2015. In the chart above, it is clearly seen that the stock also witnessed superb accumulation within a broad range of 330-450 in February this year as well. Considering the fact that the stock has zoomed more than 5 times within a period of just more than a year, we feel that the stock can actually put up a similar performance over the next year 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 session indicated with steep rise in price along with the increase in the volumes. The stock has immediate strong support paced at 420 levels and the uptrend is expected to continue in the stock till it stays above the 340 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 1 year, 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 500, and average the long position on dips, if any, around the level of Rs. 420 for the mentioned target levels with a strict stop loss placed below the level of 340 on a weekly closing basis.


Tech Mahindra

Tech Mahindra is outperforming CNX IT last month generated -0.65% return whereas CNX IT generated -1.12 % return so far. Historically, the stock was consolidating in a broad range between 120 to 280 levels with positive bias and witnessed breakout from 280 levels and made all time high of 748.78 in the month of Feb 2015. In last month, the stock has almost tested and given strong up move near its 20- month EMA which indicates an overall strength in the counter.  Also, weak rupee will make information technology sector more attractive as they get majority of revenue from exports. Indian rupee is trading near its multiyear low against the dollar after china devalued Yuan by 2 per cent in the month of Aug 2015 pulling down most of the emerging currencies. 

Points of Observation

Bollinger band (20, 2) is also widening on monthly chart which indicates buying interest of the participants between the confidence interval. The stock is trading below its mean but an overall direction of Bollinger band in positive side which shows the  stock is likely to test upper band or it may breach upper band in coming months

The stock witnessed profit booking from its all time high of 748.70 levels to 216.50 levels which was also its approx 50 % Fibonacci retracement support level (467.10) drawn from 216.38 to 747.88 levels. 

Among the indicator ,14 week RSI is trading near its signal line and trading just above it .The RSI has also taken support around 29-32 levels and currently trading around 41.99 levels this means the stock has still a lot of room on the upside.


CYIENT

CYIENT has surged over 5.8% during the last week outperforming the broader markets. The stock is in secular uptrend and is forming higher highs and higher lows in monthly charts indicating strength in the counter. The stock has recorded its all time high of 615 on 24th of June and from there it corrected by around 19.3% and took support at 496 levels, which is also around 78% retracement of its previous rally from 460 to 615 levels, and started bullishness in the stock. And hence we expect the stock to start a fresh leg of rally from these levels to the said targets.

Points of Observation

On the daily charts as well as in the weekly charts the stock is trading above its 21/50/100/200 EMA levels indicating the bullish bias in the counter.

The stock has seen fresh accumulation in last few days from 200 DEMA levels indicated with a V shape recovery followed by a consolidation phase. 

Among oscillators, RSI on weekly chart is trading at 57.01 indicating the strength in the counter and possibility of strong uptrend and the Parabolic SAR on daily chart also confirms the uptrend in the stock.

It is observed in Bollinger bands on weekly charts the price has taken support from the middle band and is moving towards the upper band indicating a medium to long term rally in the stock.

On fundamental side, financially the company is a consistent performer for past many years with an attractive PE ratio of 20.51 which is lower than the industry average of 22.83.


Bajaj Corp Ltd

Bajaj Corp Ltd has outperformed its benchmark index CNX 500 significantly over last one week and one month. The stock has gained more than 8% and 10% for the week and month respectively, while CNX 500 has lost around 2% for the week and month also.  The stock is trading at its all time highs when the broader markets are tumbling, indicating the strength in the stock. We expect the stock to continue its strength and out performance over next few months also. Adding bullishness into the stock, it has given multi month consolidation break out during the month with decent volumes and is also sustaining well above it. Hence we expect the stock to continue its uptrend and move much higher into uncharted territory and thus, one can accumulate the stock on decline for targets of 580 and higher in the near term.

Points of Observation

The stock has witnessed a stellar rally and is a multi bagger over last five years. The stock has generated 4X returns since its listing on 18 august 2010 at 114 levels (Ex Corporate action price).

Since the stock is trading at all time highs, hence it is trading well above all major moving averages, Hence any dip towards very short term moving averages which are in the zone of 445-460 can be used as good opportunity for averaging the stock.

The price has moved above Bollinger Bands on the weekly charts and the bands also started to widen, indicating possible fresh up move in the counter.

ADX on weekly chart started moving north wards after dipping to the lows of 27 from the highs of sub 60 in the month of January, indicating the strengthening of uptrend after 8 month consolidation.

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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.