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Technical Analysis

Author: Team Karvy/Tuesday, June 2, 2015/Categories: Stocks

Technical Analysis

 Bajaj Electricals Limited 

Bajaj Electricals surged by nearly 10% during the third week of May. The volume of trade in the stock was also pretty high. The stock has corrected around 50% from its all time high of Rs 383 in May 2014 to 199 in December 2014, and then bounced back strongly from there to the current levels of Rs 264 levels. During this bounce the stock has formed a double bottom pattern in line charts followed by a small pullback rally and breakout above the pattern resistance.  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 moving averages, indicating the bullishness in the counter and any dip towards the 200 day double exponential moving average (DEMA) can be used as buying opportunity.

- The stock has seen fresh accumulation. It has immediate strong support at Rs 224 levels and the uptrend is expected to continue in the stock till its stays above that level.

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

- On fundamental side, the stock is going to be one of the major beneficiaries of upcoming GST bill. The company is also one of the top players benefiting from the ongoing push for LED lighting devices.

 Mahindra & Mahindra Limited 

Mahindra & Mahindra Limited has outperformed CNX Auto last month generated 9.66% whereas CNX Auto generated 4.81%. In last month, the stock has tested and given strong up move from its 20- Month EMA which indicates an overall strength in the counter. Historically, the stock was consolidating in a broad range between 621.10 to 1026 levels with positive bias and witnessed breakout from 1026 levels and made all time high of 1433.70 in the month of Aug 2014.

Recently, M&M signed a definitive agreement to acquire 33 % in Mitsubishi agricultural Machinery Co(MAM) for $25 million or Rs 160 crore. The acquisition will help the Mahindra’s work closely to devise an appropriate product portfolio strategy for the overseas market. Apart from penetrating deeper into US market, this tie up will help M&M reach out market of China, South East Asia and Eastern Europe.  MAM is a subsidiary of Mitsubishi Heavy Industries which makes makes tractors, harvesters and transplanters. Besides its home market of Japan, MAM has a reasonably strong presence in South-East Asian and US. Its turnover in 2014-15 was nearly $410 million. Mahindra  is also likely to launch a lighter tractor in India with the help of Mitsubishi next year which will help company crank out 20,000 units aimed at the horticulture segment. 

Points of Observation

- The stock is also trading above from its all short term and long term moving averages which shows that the stock has still potential to go further upside.

- The stock witnessed profit booking from its all time high of Rs 1433 levels to Rs 1102 levels which was also its 50 % Fibonacci retracement support level (Rs 1086) drawn from Rs 740 to Rs 1433 levels.

- Among the indicator, 14 week RSI is trading above its signal line pointing northward .The RSI has also taken support around 42-45 levels and currently trading around 52.41 levels this means the stock has still a lot of room on the upside.

 Jubilant FoodWorks 

Jubilant FoodWorks is trading around its lifetime high levels and has gained nearly 18% in May. The stock has witnessed a straight line rally and generated whopping returns of more than 1200% since its listing in 2010 at a price of Rs 145. In the month of November 2014, the stock had a breakout from a 2-year consolidation range with decent volumes and is currently sustaining well above that range indicating strength in the counter. The stock gained around 4% after the release of pretty good quarterly results. Going forward, we expect the stock to rally into unchartered territory over next few months, and the gap is likely to act as a very good support on any declines and thus, one can accumulate the stock for targets of Rs 2,080 and higher with a stop loss below Rs 1,480.

Points of Observation

- The company has posted 20 % growth in total income (YoY). Total income of the company stood at Rs 2,100 crore for the year ending March 2015 compared to Rs 1,746 crore in the previous year. The management has stated that it was successful in executing its business and advertising strategies, and new product launches. Adding to the management efficiency, change in business conditions, favorable demographic mix, recovery in urban economy cycle, and increase in consumer discretionary spending are likely to add up to the top line numbers. With robust expansion plans and lower inflation cycle could result in better bottom line numbers.

- Technically, the stock is consistently making cycles of higher highs and higher lows on monthly charts, and is currently trading well above its previous monthly swing high of Rs 1,650 clearly indicating that the stock is in a strong secular uptrend.

- The stock is trading well above all major moving averages, and deliverable buy volumes over last few weeks were strong and the stock is also taking support from its 50 weeks moving average indicating the stock is in the grip of bulls.

 Oberoi Realty 

Oberoi Realty is a Mumbai-based real estate developer which has main business interests in residential, office space, retail, hospitality and infrastructure projects. The stock is in secular uptrend from the levels of Rs 153 since September 2013 and hit a new life time high at Rs 334 levels in February 2015. Thereafter the stock witnessed profit booking and is being supported by 34 day EMA at Rs 275 levels and also concurrently at 50% Fibonacci retracement drawn from Rs 203 levels to Rs 334 levels. The stock gained 13% in the last three weeks outperforming the CNX Realty index which los 1.25%. We expect the stock to continue its uptrend by making fresh life time highs in near term. Investors could accumulate the stock on declines for targets of Rs 370 and higher in the near term.

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.

- As seen on weekly charts the stock is trading in an upward sloping channel currently in the range of Rs 240-334. A strong breakout above this channel would give the stock about 90-95 points targets on the higher side from the breakout point. 

- 60 period weekly CCI is continuously plotting in the bullish zone and taking support of zero line during corrections indicate bulls are strongly intact in the stock in a medium to long term perspective.

- On the earnings front the company posted good Q4 earnings for the year FY14-15 with 34% increase in the net profit YoY. Also the company has shown a substantial upbeat in its increase in operating profit which is up by 41 percent than the estimated 30 percent indicates the operational and managerial efficiency of the company, a scale for substantial growth potential for the company in the medium to long term perspective.

 Bajaj FinServ Limited 

The monthly chart structure of this fundamentally strong stock suggests formation of cycles of higher highs and higher lows, supported by stellar 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. Bajaj Finance is in a structural uptrend and looks well set to march steadily towards the Rs 5,850-6,250 mark over the next 9-12 months. The stock has been relentlessly rallying from its March, 2009 low of Rs 44.21 to a recent lifetime high of Rs 4,699, which was clocked on 9th April, 2015. The stock also broke out above its previous resistance at Rs 1,600 in December, 2013. The stock also witnessed superb accumulation within a broad range of Rs 3,400-4,500 in January this year as well. Considering the fact that the stock has zoomed more than threefold 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 at Rs 3,900 levels and the uptrend is expected to continue in the stock till its stays above the Rs 3,500 levels.

- Long term investors could go long in the stock on dips to Rs 4,400, and average the long position on dips, if any, around the level of Rs 3,900 for the mentioned target levels with a strict stop loss placed below the level of Rs 3,480.

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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.

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