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Technical Analysis

Author: Team Karvy/Saturday, August 1, 2015/Categories: Stocks

Technical Analysis

NCC 

NCC has surged over 6.63% during the current week outperforming the broader markets. The stock has corrected around 51% from its 52 week high of Rs 118.15 in April 2015 to Rs 57.7 in June 2015 and bounced back strongly from there to Rs 87.3 levels in last week indicating the end of correction in the stock. The stock was consolidating for past 27 trading sessions between Rs 76-86 levels and has given a breakout from that range on 24th July 2015. 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, the stock is trading above all of its short term and long term moving averages, In weekly chart the stock is trading above its 50/100/200 EMA levels indicating the bullish bias in the counter.

- The stock has seen fresh accumulation in last couple session indicated with a V shape recovery along with the increase in the volumes followed by a consolidation phase. 

- Among oscillators, RSI on weekly chart is trading at Rs 54.58 and is pointing northwards indicating the strength in the counter and possibility of strong uptrend and the Heiken candlesticks on weekly chart also confirms the uptrend in the stock.

- 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 company’s has witnessed significant reduction in trade receivables and working capital needs. The debt equity ratio is between 1-0.9 which is a very good number for an infra company indicating its debt reduction efforts are paying off.


NTPC

The stock is in a secular uptrend forming higher highs and higher lows on monthly charts. After making life time high of Rs 269.15 the stock went into cyclical correction mode and corrected price and time wise. After making a swing bottom at Rs 109.75 stock has made a high of Rs 167.75 and corrected lower towards Rs 125 and currently has retested the same and made a higher bottom at Rs 128.15.

Points of Observation

- On the daily charts, the stock is in the process of forming inverted head and shoulders pattern the neckline of which is placed at Rs 142, with the probable right shoulder in the range of Rs 142-134. 

- On daily charts the stock has closed above its 20 SMA with lower BB at Rs 130.3 which is key support in the short term to medium term. 

- On monthly charts the stock has taken support at the trend line break out drawn from its all time highs of Rs 269.15. The stock is forming a bullish Hammer pattern in Japanese candlestick pattern; the stock is trading above its 20 months SMA supporting the bullish bias.

- On weekly charts the stock has found support above its lower Weekly Bollinger band which is currently pegged at Rs 126.9.

- Among oscillators, on daily charts the 14-day RSI line is trading above the signal line pointing northwards and the MACD has shown a divergence with price indicating that bears have lost the momentum on the down side.

- On weekly charts the stock has formed a prospective double bottom pattern at Rs 125.

- The only concern is from the 200 Day SMA which is placed at 142 area; but the slope of the same has flattened and the stock prices have flirted with it in the past also within the trading range of Rs 125-165.


Jubilant

Jubilant has consolidated in a range of Rs 160-185 levels for more than two months. Since then the stock has gained almost 30% once it broke the said consolidation range and has made a recent high at around Rs 243 levels.  It seems that the stock has bottomed out and in spite of the fact that the stock has moved significantly, further upside in the stock cannot be ruled out and it seems well set to head higher. In the recent rally the stock has moved higher with spur in volumes, indicating strength in the counter. The stock is likely to consolidate near its current levels and take a pause before it resumes its fresh up move, hence giving an ideal opportunity to buy and even accumulate on any declines.

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 Rs 310-320 levels in the short to medium term. 

- The stock has been witnessing huge accumulation from the last 10-12 trading sessions indicating steep rise in price backed with higher volumes. The stock has a strong support at around Rs 200 levels and is likely to head towards Rs 310-320 levels, where it is likely to face some resistance. 

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

- The stock has given a trend line break out at around Rs 203 levels on the monthly charts when drawn from the highs of Rs 248.60 on 27 December 2012 with the highs of Rs 222 on 26 June 2014. 

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


Gati Limited

Gati Limited is India’s pioneering express distribution and supply chain provider. The company was the first to foray into cold storage 30 years back.  The company has a strong market presence in the Asia Pacific region as well as the SAARC countries.  It offers an integrated Express distribution as well as Customized Supply Chain Solutions to customers across diverse industry verticals. Gati is also present internationally having offices in China, Hong Kong, Singapore, Nepal, and Thailand.

Gati has outperformed the Nifty last week and close the week with gain of 2.67% where the Nifty has closed the week with negative return of 0.96%. The stock has seen profit taking from the high of Rs 342 levels which dragged the stock to the low of Rs 140 levels. Where the price action in the stock has reflected bullish engulfing pattern near its 200 DEMA on daily chart and resumed its up move. Thereafter the stock has spent approximately a month in the range of Rs 156-176 levels. However the stock has given breakout of said consolidation range and trading well above the same with notable volume suggest stock is well placed to resume its up move. The stock may face minor resistance around 200 DEMA paged at Rs 195 levels and any move above the said levels will open the broad room for the target of Rs 230-240 levels in near term.

Points of Observation

- The parabolic SAR has triggered the fresh buy signal on weekly charts on the second week of July 2015 and price is comfortably trading above the same. Which suggest the move started for the low of Rs 140 levels will remain intact for the near term. The constant volume formation during the above said consolidation range suggests strong hands are accumulated the stock. 


Mayur Uniquoters 

Mayur Uniquoters is engaged in manufacturing of artificial leather and they are the largest manufacturer in India. The company concentrates mainly on three segments--Footwear (accounting for 55% of its revenue), Auto (25%) and Furnishing (10%). The artificial leather industry is now on a high growth trajectory. It is the only company from India and among the only second in Asia to cater to the US auto OEM requirements.

The stock witnessed stellar rally in less than one year time frame from the lows of Rs 101 levels to Rs 485 levels posted in the end of July’14 gain of more than 377%, post which stock entered into a long consolidation mode in last one year. 

In last one year stock witnessed more of time consolidation, as price correction remained restricted to 23.6% retracement of mentioned rally. Meanwhile it also attempted to move higher, but failed to sustain at higher levels, in the course stock posted fresh life time high of Rs 515 in mid of March 2015 and once again drifted lower below Rs 380 levels in last month.

Points of Observation

- Technically, stock is hovering near its 200-DEMA which is currently placed at Rs 414 levels, and it is also holding above its 21 and 50-DEMA placed in the same vicinity of its major moving average. On the technical setup 14-period RSI on weekly chart managed to hold 40-levels during the phase of price correction and recently moving higher above equilibrium level, indicating bulls are in control and ready to take prices higher. 

- From the above observation, it seems that after recent price correction, the stock is attractively placed and offers an excellent opportunity to accumulate stock at current levels and one may average the stock price on any dip towards Rs 395-400 levels keeping a stop loss below Rs 370 levels, for an upside target of Rs 515 and Rs 550 levels over next 8-12 months time frame. 

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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.