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Technical Analysis

Author: Team Finapolis/Sunday, May 2, 2010/Categories: Stocks

Technical Analysis

 Ambuja Cement 

- The overall chart structure of the stock suggests formation of higher tops and higher bottoms on the monthly timeframe, clearly indicating that the stock is in a secular uptrend.

- After breaking out of from the multi week resistance zone of Rs 235-238, the stock scaled to Rs 287 and went into correction mode.

- In the current correction, the stock has found support on the middle weekly Bollinger band and is forming a base above it before resuming its up move.

- The stock is trading above its medium 100 day EMA and long term 200 day EMA and currently just hovering around short term moving average Rs 245 (100 EMA) forming base for an up move.

- Among other technical observations,  weekly DMIs have a bullish signal as the plus DMI is above the Minus DMI indicating that the medium and long term up trends are intact.

 Our Take 

We expect the stock to resume its strong uptrend from here and hence any declines could be utilized for fresh long accumulation. We expect the stock to initially rise upto Rs 277 and then move towards the Rs 300 level.


 Bharat Forge 

- Bharat Forge is one of the standout performers in the auto ancillary space. It has given better returns than all benchmark indices. Expect this stock to carry on in the same fashion.

- On the technical charts, the stock clocked a fresh life time high of Rs 1347.30 levels and thereafter entered in to the sideways consolidation mode. The stock witnessed a decent correction of more than 10% from the highs in line with the weakness in the broader markets. On the lower side, the stock took support at its 50- DEMA and again started its northward journey, supported by notable number of trading volumes. Historically, the stock pulls back smartly once it takes support at its 50-DEMA.

- Currently, the stock is trading well above all of its major short and long term moving averages indicating the inherent strength in the counter.

- The stock may get more aggressively charged by the bulls once it decisively crosses above Rs 1340 levels on the higher side.

 Our Take 

Looking at the charts, investors could enter the stock at the current levels with a target of Rs 1350-1420 levels. Any dip towards Rs 1230 levels may be an excellent opportunity to average the stock, keeping strict stop loss placed below Rs 1185 levels.


 Cipla 

- Cipla has seen a decent rally since May 2014 from the levels of Rs 367 and has made an all time high at Rs 752 levels in March 2015. Thereafter, the stock has witnessed slight profit booking which took the counter towards its supporting 34-day EMA at Rs 696 levels.

- The stock is trading in an upward sloping channel after a sharp rally from Rs 367 levels to Rs 639 levels within a range of Rs 129 indicating any upward breakout of the channel would witness a significant rally towards Rs 880-
900 levels.

- On the daily charts, the stock is placed above all its Exponential Moving Averages and on the weekly charts, the stock is trading above its 13-week EMA.

- Among technical indicators, the 14-day RSI took support at the 50 levels during the recent profit booking and is trading in a comfort zone above the 9-day EMA signal line, indicating that the bulls are still intact in the stock and could take the stock towards the higher levels at 800-820 levels above its previous lifetime high at 753 levels.

 Our Take 

The counter is expected to break the consolidation phase and can see a sharp rally above Rs 730 levels, which can push the counter to hit new 52-week highs.


 HCL Technologies 

- HCL Tech has ended the month of March 2015 on a flat note after making a lifetime high of Rs 1033.53 with remarkable deliverable volumes, clearly suggesting the overwhelming demand for the stock at even higher levels. This raises confidence that the stock can move towards Rs 1080 our target levels sooner once the Rs 1000 mark is taken out on a closing basis.

- The overall chart structure of the stock suggests formation of higher tops and higher bottoms on the monthly timeframe, clearly indicating that the stock is in a secular uptrend, ever since it began its up move from a low of Rs 221.29 to its recent all time high level of Rs 1033.53. Buying activity along the stocks upward movement has been phenomenal and the stock can witness more accumulation as it moves higher.

- The stock is trading above all major moving averages like the 50 day EMA at Rs 943, 200 day EMA at Rs 822 and also above its short term 21 day EMA at Rs 979.70 which is a positive sign. 

 Our Take 

The counter is expected to break the consolidation range and can see a sharp rally above Rs 1000 levels, which can push the counter to hit a fresh life time high.


 Hindustan Petroleum Corpn. Ltd. 

- Hindustan Petroleum is one of the major integrated oil refining and marketing companies in India. Falling crude oil prices and de-regularized oil pricing methodology by the government has significantly improved the profit margins of oil marketing company, and it’s expected to continue in the near future.

- In the last 18 months, the stock witnessed a stellar move from the lows of Rs 156 levels to a high of Rs 670.

- Currently the stock price is placed well above its medium to long term moving averages.

-  If the stock breaches Rs 670 levels, it will enter into uncharted territory. Investors can look at an upside target of Rs 725-750 levels.

 Our Take 

After accumulation, the stock price is well poised to surge in the coming weeks. Investors van look at a target between Rs 725 and Rs 750, while any dip towards Rs 620 levels can be utilized to average the stock price, placing stop loss below Rs 585 levels.


 Hindustan Unilever Limited 

- On a monthly basis, Hindustan Unilever ended lower by just about 4% for the month of March, 2015, after broad based selling across all sectors was witnessed as the broader markets plummeted from lifetime high levels.

- This selloff provided traders with an excellent opportunity to accumulate the stock with a short to medium term perspective as the stock has retraced just about 50% of its entire up move from the recent swing low of Rs.744.5 to its all time high of Rs.981.00. The stock is trading above its 200 day EMA at 788.57, while the stock is trading below its 50 day EMA at Rs.893.75.

- The stock has immediate support at levels around 855-848 levels clearly indicating that the stock is well placed to surge higher from current levels.

 Our Take 

Investors could buy the stock at the current levels with targets in the region of Rs 940-965. Among FMCG stocks, HUL looks a good bet. Any dip towards the Rs 830 mark can be utilized to average the stock, with a stop loss at Rs 808 levels.


 IndusInd Bank 

- IndusInd Bank is a solid performer in the banking sector. In the current market scenario, the stock outperformed its peers and Bank Nifty significantly in the last months. The stock is in structural uptrend making higher highs and higher lows since March 2009.

- After posting robust Q3 numbers in the mid of January, the stock continued it’s up move and made a life time high of Rs 963. Thereafter, the stock has seen profit taking from dragging it down to  Rs 850 levels. The historical price action from the low of RS 370 levels has honored 50 DEMA on daily charts. However, the fall from the said levels took the support around 863 levels (50 DEMA) and trading well above the same, suggests the stock has completed its minor correction and well placed to resume its upward move.

- Among technical indicators, the 14-day RSI is trading in the comfortable zone with a reading of 50, indicating strength in the counter. The historical price action in the stock has reflected a breakout after every consolidation phase (move started from the low of 370 levels). This indicates the appetite for the stock after every consolidation phase.

 Our Take 

RBI policy and expected rate cut will enhance the confidence in the market participants and any positive surprise by RBI will act as a fresh trigger for the stock. Investors could look to enter the stock around Rs 886 levels with a target of Rs 945-965 levels in the near term.


 Larsen & Toubro 

- The company has been bagging orders and executing them in time continuously over the last few months. With the expectation of economic recovery in the next few quarters and increased investment in infrastructure, construction and capex cycle, L&T will be a major beneficiary.

- L&T ended lower by 2.74% last month, and outperformed the broader index, which fell by 4.62%. L&T will continue its outperformance over Nifty for the next few month. The stock after hitting a life time high of Rs 1893 last month, witnessed a round of profit booking which made the stock to correct around 15% from its peak to the lows of Rs 1613.45.

- In the months of January and February this year, the stock has given a breakout from the eight month consolidation range with decent volumes.  However, over the last one month the stock has witnessed a throwback with low volumes to validate the range. Investors can  expect the stock to find support near the consolidation range, complete its correction and trigger a fresh move towards its life time high and much above.

 Our Take 

The stock is expected to move higher from current levels towards Rs 1850. Any minor corrections should be used as a buying opportunity for optimum returns. Expect the stock to retest its lifetime high in the coming months and any break-out of those levels could push the stock into unchartered territory.


 UPL Limited  (formerly known as United Phosphorus Limited)

- UPL has outperformed CNX Commodity last month and generated 6.16% return where CNX Commodity index fell by 6.22%. The stock has broken out of Rs 437 levels on closing basis on daily charts.

- Technically, on weekly charts,  the stock has begun forming the ‘bullish flag pattern’ indicating strength. 

- Historically, the stock has given consolidation breakout from Rs 447 to Rs 400 levels after giving strong up moves from Rs 349 levels with impressive volumes. This indicates a Rs 60-70 upward headroom for the stock in the short term.

- The stock is also trading above all of its major short and long term moving averages with technical indicator 14 day RSI line (61.95) showing and trading above its signal line (57.11), clearly indicating the bullish trend is likely to remain intact in the counter.

 Our Take 

Investors can buy the stock at the current levels with targets of Rs 485-495. Any dip towards the Rs 425 mark can be utilized to average the stock. Keep Rs 408 as the stop loss.


 Zee Entertainment 

- Zee has rallied from Rs 265 levels in August 2014 to Rs 402. in November 2014 up by 51.8%. The stock has been in a sideways trend since then. The stock has retraced by 50% of that rally during this period and closed above the 50% retracement levels.

- The stock has tested its 200 day EMA levels in last week and bounced back from there with strong volumes. Historically, the stock was respecting the 200 day EMA levels on several occasions and bounced back to positive territory.

- On weekly charts the stock has formed an inside bar pattern indicating a possible trend reversal in the counter. The Bollinger bands on weekly charts show the formation of primary candle indicating possible mean reversion which is a positive for the stock.

 Our Take 

The recent profit taking after the stock making  a 52-week high of Rs. 402.4 levels offers the opportunity to accumulate the stock. Investors can have a target of Rs 356-371, and stop loss of Rs 322 for Zee.

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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.