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Technical Analysis

Author: Team Karvy/Friday, January 8, 2016/Categories: Stocks

Technical Analysis

Indraprastha Gas Limited

The stock is rising from 455.05 levels with minor pullbacks indicating its bullishness on all major time frames. The stock witnessed breakout from 495 levels on closing basis on weekly chart. Historically, the stock has moved from 375.35 level and made high of 523 levels after that the stock was consolidated in a broad range between 450 to 500 levels and recently the stock has given fresh breakout and made its all time high of 524.10 levels. If we talk about bigger trend, the stock has also taken support from 38.2% Fibonacci retracement (387.70 levels) drawn from low of 247.70 levels to high of 489 level on weekly chart. In the recent past, the government of Delhi banned new registration of selected diesel vehicle and we are expecting this would be positive for the stock.

Points of Observation

- The stock is making higher highs and higher lows on all major time frames. Last week, the stock witnessed more than three times volumes in the counter with rise in price which is suggesting participants are bullish in the counter and expecting more upside in coming months

- Among the oscillators, the RSI is trading in a bullish zone between 50-70 level and also the RSI line is trading above its signal line and currently there is no sign of any reversal or divergence in the counter

- We therefore recommend long term investors to go long in the stock on dips to Rs 505-510, and average the long position on dips, if any, around the level of Rs 462-467 for the mentioned target levels with a strict stop loss placed below the level of Rs 419 on a weekly closing basis.


Bayer CropScience

The monthly chart structure of this fundamentally strong stock, suggests formation of cycles of higher highs and higher lows, supported by stellar volumes on every rise, clearly indicating there is a lot of demand for the stock even at higher levels which is a positive sign in itself. Bayer crop is in a structural uptrend and looks well set to march steadily towards the Rs 4,200-4,500 mark over the next 9-12 months. The stock has been relentlessly rallying from its March, 2012 low of Rs 717.70 to a recent lifetime high of Rs 4,235, which was clocked on 16th April, 2015. The stock also broke out above its previous resistance at Rs 1,800 in June, 2014. In the chart above, it is clearly seen that the stock also witnessed superb accumulation within a broad range of Rs 3,200-3,600 in January,2015. Considering the fact that the stock has zoomed more than twofold within a period of just 6 quarters, we feel that the stock can actually put up a similar performance over the next year as well.

Points of Observation

- The stock has seen fresh accumulation during the first half of the calendar year with steep rise in price along with the increase in the volumes. The stock has immediate strong support paced at 2900 levels and the uptrend is expected to continue in the stock till its stays above the 2450 levels.

- Among oscillators, the 14-month RSI line is trading in the comfortable territory after a long time spent in the overbought territory with a reading of 60.08, 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 on dips to Rs 3,300, and average the long position on dips, if any, around the level of Rs 2,900 for the mentioned target levels with a strict stop loss placed below the level of Rs 2,450 on a weekly closing basis.


WABAG 

WABAG is one of the world’s leading companies in the water treatment field. The company’s key competences, which are based on over 90 years of plant building experience, lie in the design, completion and operation of drinking water and wastewater plants for both the municipal and industrial sectors.

Points of Observation

- WABAG has given a descending triangle breakout combined with a moving averages breach at 695-700 levels and closed much higher supported with robust volumes in the month of November 2015. The stock has then moved lower with sideways range on the back of profit booking, but has maintained its position above the said breakout levels on the daily chart. The stock is thereafter hovering in the narrow range of 670-720 levels with positive bias.

- The counter is trading with bullish bias and is hovering in between its short & 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.

- The above pattern breakout suggests a price target of 1040-1050 levels for the time frame of 9-12 months. Keeping a conservative approach one may look for the targets of 900-950 levels in medium to long term perspective which is almost coinciding with its all time high levels. Therefore, we recommend buying the stock at current levels for the targets of 900-950 with stop loss placed below 610 levels.

- On the fundamental point of view, the company will also be benefited with Namani Gange project which is to clean Ganga River and the famous Swatch Bharat Abhiyan for clean India. The government is having special focus for implementing these two projects.


WELSPUN INDIA Limited

WELSPUN INDIA Limited is one of the global leaders in Home Textiles with global reach, delivering to more than 50 countries. Increasing sales of innovative products, brands and good product mix clubbed with capacity expansion, high utilization levels to aid both the top line and bottom line in the coming quarters. The stock is one of the outperformer in CNX 500 with a gain of nearly 5% for the quarter as on date, while the index has gained only 0.08% during the same period.

Points of Observation

- WELSPUN INDIA is a multi bagger with gains of more than 1600% over last two years. The stock has witnessed a stellar rally from the levels of sub 55 to the highs of 963 indicating it’s strong up trend. However over last few months the stock has been consolidating in the range of 665-950. As a continuation of trend, we expect the break out of the consolidation range on the higher side and the stock to move towards unchartered territory.

- The throw backs in the stock are on low volumes and have respected its long term moving averages during the corrections, indicating its structural up trend and the stock is also in strong hands.

- After a strong up move in the counter, the Bollinger band set up on daily chart has started to contract with drop in volatility and price is also consolidating sideways indicating a squeeze in bands. Hence a break out of the range gives a fresh up move into the stock with increase in volatility. 

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

- Hence with a medium term perspective we expect the stock to move beyond the range and plot prices into unchartered territory. However any dip towards the previous major swing lows of 775-900 can be utilized to average the price.


Insecticides India Limited

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. Insecticid is in a structural uptrend and looks well set to march steadily towards the Rs 550-560 mark over the next 9-12 months. The stock has been relentlessly rallying from its March, 2014 low of Rs 139.40 to a lifetime high of Rs 632.15, which was clocked in the month of April, 2015. 

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 the recent past as it is witnessing an bullish inverted head and shoulders pattern and currently in right shoulder of the same within the range of 395-435 , with neckline placed at 435

- On Elliott wave front, the stock has completed an ABC corrective pattern from the highs of 632.15 to the lows of 347.65 and now completed new up cycle has started as witnessed by five wave advance.

- Among oscillators, the 14-month RSI line is trading just a wee above the signal line pointing northwards.

- We therefore recommend long term investors to go long in the stock around Rs 430, and average the long position on dips, if any, around the level of Rs 410 for the mentioned target levels with a strict stop loss placed below the level of Rs 379 on a weekly closing basis.

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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.