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Technical Analysis

Author: Team Karvy/Thursday, October 1, 2015/Categories: Stocks

Technical Analysis


KITEX has given a significant return in last one and a half year as the stock rallied from the levels of 90 towards 1074, gaining almost 1100%. Profit booking was witnessed in the stock at the higher levels which dragged the stock towards 575 levels, correcting almost 50% from its highs. The stock has been trading in a broad range of 690-820 levels since last 2 months. It seems that the stock has bottomed out and is ready to move higher. The stock is currently trading near its upper band of the said trading range and is on the verge of giving a break out on the higher side. Any decline in the stock towards 760 levels can be used as a buying opportunity to accumulate the stock for the targets of 1000-1050 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 1000-1050 levels in the short to medium term. 

- The stock has seen accumulation at the lower levels and it has been moving higher with high volumes from the last 6-7 trading sessions indicating rise in price backed with decent volumes. The stock has a strong support at around 760 levels and is likely to head towards 1000-1050 levels. 

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

- The price of the stock is trading above the Parabolic-SAR indicator indicating that the upward trend is likely to continue in the counter.

Divis Laboratories Ltd

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 few months, clearly indicating there is a lot of demand for the stock even at higher levels which is a positive sign in itself. Divislab is in a structural uptrend and looks well set to march steadily towards the Rs 1350-1400 mark over the next 9-12 months. The stock has been relentlessly rallying from its May, 2015 low of Rs 837 to a lifetime high of Rs 1242, which was clocked in the month of August, 2015. The stock also broke out above its previous resistance at Rs 980 in April, 2015. In the chart above, it is clearly seen that the stock also witnessed superb accumulation within a broad range of Rs 840-980.

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 just above its previous supply zone indicating that buying interest is still present in the stock and previous resistance is now acting as a support.

- 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 one 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 Rs 1114.7, and average the long position on dips, if any, around the level of Rs 1070 for the mentioned target levels with a strict stop loss placed below the level of Rs 979 on a weekly closing basis.


TORNTPHARM 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 1718.40 and from that point it has come to 1380 levels giving a correction of almost 20% from its high. The stock is trading above its 200DMA which is at 1260. The stock has major upward sloping trend-line support at 1350 levels and is currently trading near the lows it made in the month of August. The next major monthly support is at 1277 levels which is also near its 200DMA, a long term trend change level. 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 200 levels and is likely to head towards 1650 levels, where it is likely to face some resistance. 

- Among oscillators, the 14-day RSI has been showing divergence against price, indicating price rise in medium term. 

- On monthly charts the stock has come to its previous breakout levels of 1400, and it is highly likely that it will take support at its breakout levels and once again move north wards. 

- The maximum correction in this stock for the last two times has been around 20% in the month of February 2015 and April 2015 and post that the stock has made new high both the times. Even this time the stock has corrected around 20% from its high and is likely to go till its previous high. 

Aurobindo Pharma

Auropharma has been in a secular uptrend since August 2013 making higher highs and higher lows on daily charts. The stock has corrected significantly in the last month during the global sell off which has dragged the stock and made the panic low of 645 levels. However, the stock has found the support of 100 DEMA on daily chart and spends approximately 10 trading session around the same. Thereafter, the Parabolic SAR has triggered the buy on daily charts suggests the immediate trend in the stock is reversed and market participants are considering it’s an opportunity to accumulate the stock. The stock has outperformed the CNX Pharma significantly last week and closes the week with the gain of 4.72% whereas the CNX Pharma has closed the week with 0.50% of return. Therefore, we recommend investors to accumulate the stock at current levels of 735-740 and add further to the holdings if the stock re tests the lower levels of 690 with a stop loss placed below 630 for the target of 920-940 from 1-2 months perspective.

Points of Observation

- In the last one year the stock has giving nearly 2X return and expected to trade with the same momentum in near term. As the market expected to remain volatile in the near term, the pharma sector could remain in focus. 

- The fall in the stock from the high of 832 levels has placed the stock toward the middle band on the weekly Bollinger band where the stock found the support and bounced toward the upper band of Bollinger band.  

- On the daily charts, the stock is trading above most of its major moving averages indicating the inherent strength in the counter and is likely to head northward towards 920-940 levels in the short to medium term. 

- The price of the stock is trading above the Parabolic-SAR indicator on daily charts indicating the stock has resumed its up move after a decent correction. 

GRUH Finance Ltd

GRUH Finance Ltd is subsidiary of HDFC Ltd. The company primarily provides home loans to individuals and families for purchase, construction, extension, repair & renovation. The company operates in a niche segment, catering to the lower-income group in rural and semi-urban areas. The company has diversified geographically and operates in eight states with number of offices. The stock price is in secular uptrend from last couple of years. 

Points of Observation

- In the mid of Jan’15 stock made a life time high of 317.70, witnessed relentless rally in last couple of years. After such a stellar rally stock witnessed profit booking from the highs, found support near its 200-DEMA and entered into a brief consolidation mode in last few months. Currently stock is poised well above its 200 and 50-DEMA placed at 235 and 243 levels respectively. 

- In the last week stock gave breakout from its falling trend line adjoined from the highs with surge in volume indicates strong hands have accumulated stock on dips and prices are likely to shoot higher in the near future. 

- On the technical setup momentum oscillator 14-period RSI is reaffirming underlying bullish tone, as oscillator managed to hold above 40-level during price correction, and currently it is inching higher in sync with price. On the daily chart MACD (12/26/9) has given a Bullish Crossover in bearish territory and in the last few sessions moved above signal line, strengthens the positive momentum in the counter.

- From the above observation, technically stock has a potential to surge higher toward life time highs and eventually in an uncharted territory in the coming months. Hence, one may buy stock at current levels and average the stock price on any dip towards 240 levels keeping a stop loss below 220 levels, for an upside target of 320 and 340 levels over next 3-6  months time frame. 

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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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