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Research Desk –Stock Broking India ValueMax SEPTEMBER 01, 2016 ValueMax Monthly Investment Ideas ValueMax helps clients to take a long stance on st...
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Research Desk –Stock Broking India

ValueMax

SEPTEMBER 01, 2016

ValueMax Monthly Investment Ideas ValueMax helps clients to take a long stance on stocks from the S&P BSE-100 universe. Comprising monthly technical investment ideas, ValueMax will have 10 stock recommendations, which will be issued at the beginning of every month. The selection and recommendation criteria will be based on technical analysis. ValueMax is a brief technical report on the ideas, justifying our view on the stocks and the reason for the selection. The report is also available on Karvyonline.com. Book profit/exit messages will be communicated through our trading platforms during the LIVE market under the head ValueMax. Please find the ValueMax investment ideas for September 2016.

Stock

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

AMBUJACEM

CEMENT

277.95

BUY

270

255

310

324

CIPLA

PHARMA.

572.95

BUY

550

525

635

650

HINDALCO

METALS

159.25

BUY

153

148

171

178

HINDPETRO

ENERGY

1218.70

BUY

1155

1115

1325

1360

LT

CG

1512.95

BUY

1435

1385

1650

1680

MARUTI

AUTO

5053.65

BUY

4830

4640

5470

5560

RECLTD

BFSI

238.35

BUY

218

210

267

281

SBIN

BFSI

252.50

BUY

245

235

275

280

TATAGLOBAL

FMCG

140.25

BUY

133

129

153

158

TITAN

CD

418.50

BUY

400

385

455

475

CMP: Current Market Price;

SL: Stop Loss;

Tgt: Target

Note: All charts are sourced from Spider Software.

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Stock AMBUJACEM

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

CEMENT

277.95

BUY

266

255

310

324

Key levels Moving averages

Support

Resistance

21 day EMA

268.70

274

294

50 day EMA

261.02

262

312

200 day EMA

235.30

256

330



AMBUJACEM is one of our preferred counter in the cement space .The stock has surged in line with market, it has given a return 3.7% on the monthly basis in comparison to the benchmark Nifty Commodity generated 3.89%.



The stock has given breakout from “SYMMETRICAL TRAIGLE PATTERN “on daily chart which is nearly 276 levels and closed above the said pattern and made its 52 week high of 281.70 levels more than average volume confirmed the pattern significance.



The Bollinger band (20, 2) is also rising on weekly chart and price is trading above its upper band of the Bollinger band and there is no sign of any reversal in the stock suggest the strength in the counter. The stock is also trading well above its 21/50/100/200 day EMA levels on daily charts as well.



Among the indicators, parabolic SAR (Stop & Reverse) on weekly charts is trading below the price, suggesting buying will remain intact with the counter in near term. Among the oscillators front, the 14-week RSI (68.06) and there is no sign of any reversal this supports our bullish stance in this counter.



The stock has surged from 185 to 281 levels almost 50% increase in less than 6 months with minor pullbacks and we are expecting the stock may further go upside to test 330-340 levels in the coming weeks. Thus we recommend accumulating the stock with a stop loss placed below 255 levels.

Our take: Considering all the above data, we recommend traders to enter the stock at the current levels for targets of 277.95 levels and any correction towards 266 can be utilized to average the stock keeping stop loss below 255 levels on end of the day basis.

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Stock

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

CIPLA

PHARMA.

572.95

BUY

550

525

635

650

Key levels Moving averages

Support

Resistance

21 day EMA

550.54

560

600

50 day EMA

532.78

550

635

200 day EMA

548.71

525

650



CIPLA is one of the top pharmaceutical companies in India and one of our preferred counters from the pharma space. The stock has outperformed NIFTYPHARMA during the last month and has generated 8.64% return whereas the NIFTYPHARMA closed with a negative return of 1.78% in the month of August.



Currently the stock is in uptrend and trading well above its 21/50/100/200 DEMA levels on daily chart as well as on weekly chart exhibiting strength in the counter in all time frame. On the other hand, the counter has given breakout above 540 levels on the daily charts after the stock declared better guided for good numbers for the coming quarters in the current financial year.



The stock has seen significant bounce towards 587.50 levels after making 52 weeks low of 457.45 levels on 25 May 2016, which is nearly 25% reflecting uptrend in the stock will remain intact in near term. On weekly charts the price is moving above its mean of the Bollinger (20,2) to test its upper band supporting our bullish view in the counter.



Among the indicators and oscillators, the 14-day RSI is trading well above its 9-day signal line, clearly indicating the bullish trend in the stock is likely to continue. The Parabolic SAR (Stop & Reverse) is placed well below the price on daily as well as on weekly chart, suggesting buying will remain intact in the counter in near term.



From the above observations it is evident that stock is likely to surge higher and outperformed its peers in coming trading weeks and move towards 650 levels during the current month.

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Our take: The recent price action suggests that the positive momentum in the stock is likely to continue in the coming trading sessions as well. Hence, we recommend buying the stock for target of 635-650 levels in the near term keeping stop loss of 525 levels.

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Stock HINDALCO

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

METALS

159.25

BUY

153

148

170

178

Key levels Moving averages

Support

Resistance

21 day EMA

151.29

153

170

50 day EMA

139.02

150

174

200 day EMA

111.62

148

178



HINDALCO has gained 19.24% during the month continuing its uptrend movement. The stock has outperformed NIFTY METAL which generated return of around 5.95% for the month gone by. This month the stock made its new 52 week high and is hovering around that level.



Fibonacci retracements drawn from the high of 198.27 to the low of 58.80 indicates that the stock has closed above the 61.8% mark on the weekly chart suggesting the correction in the counter is probably over and has entered into the medium to long term bull market.



On the daily chart the stock has given breakout above its consolidation range of 153-158. On the last trading session of the month, there was some correction seen in the stock but managed to stay above the upper band of consolidation range.



On the daily chart 21 DEMA has been acting as a major support for the stock. Also, the stock is well placed above all its short and medium term moving averages.



Among the indicators, the 14-day RSI has already given a positive crossover with 9-day signal line and is pointing northwards on the monthly charts, clearly indicating bullishness in the counter is likely to continue in the near term. The Parabolic-SAR is placed below the price on the daily charts, further indicating positive biasness in the counter.

Our take: The recent price action suggests that the positive momentum in the stock is likely to continue and the counter is expected to trade higher in the coming sessions. Thus, we recommend buying the stock for the targets of 178 levels and add further on any dip towards 153 levels with a stop loss placed below 148 levels.

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Stock HINDPETRO

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

ENERGY

1218.70

BUY

1155

1115

1325

1360

Key levels Moving averages

Support

Resistance

21 day EMA

1194.96

1150

1300

50 day EMA

1133.71

1110

1330

200 day EMA

936.35

1050

1360



HINDPETRO underperformed its broader and sectoral indices for the month of August 2016. The stock witnessed a monthly loss of 3.41%, while NIFTY NEXT 50 and NIFTY ENERGY have gained around 2.44% and 3.78% respectively. However the stock has rallied more than 20% in the month of July and was continuously clocking all time highs and traded in unchartered territory well before the broader markets moved towards their all time highs.



The stock has witnessed a sharp straight line rally from the lows of sub 150 to the all time high levels of 1330 and became a multi bagger with whopping returns of 8X. However over last few trading sessions on weekly charts, the stock is forming flag pattern formation and is bouncing from its previous major unfilled gap up area. On completion of current consolidation, we expect the stock to move much higher towards its all time highs and clock fresh all time highs in the coming months.



On the volumes front, the stocks delivery volumes has picked up significantly over last few months, indicating participants interest in the stock has increased significantly. Even on the derivative front, the stock futures are witnessing good long rollovers over last five months. Hence we expect the stock to move towards its all time highs and much beyond it in the coming months.



On the daily Bollinger Band set up, the stock has touched its lower band at 1140-1150 levels and witnessed a sharp bounce towards the mean, indicating the strength in the counter, while on the monthly Bollinger Band set up, the stock is sustaining well in its upper band over last two years which suggests the inherent strength in the counter. While on the band set up on weekly and daily charts is widening indicating the volatility has increased, even the price action supports that the current positive momentum is likely to continue in the short to medium term.



Among the indicators on weekly charts, the 14-period RSI and MACD line has cooled off from over bought levels and both are still pointing northwards indicating the strength in the counter.

 Our take: Considering the above data facts, we recommend short to medium term investors to enter the stock at the current levels for targets of 1325 and higher, while any correction towards the previous major support zone can be utilized to average the stock keeping stop loss below previous major unfilled gap up area of 1120.

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Stock LT

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

CG

1512.95

BUY

1435

1385

1650

1680

Key levels Moving averages

Support

Resistance

21 day EMA

1489.99

1460

1580

50 day EMA

1487.43

1420

1615

200 day EMA

1417.53

1390

1700



Larsen & Toubro Ltd is India‘s largest and most respected Engineering & Construction Company. After steep price correction in last year stock formed a strong base and witnessed smart recovery in last few months.



The stock price cloaked an all time high of 1893.80 in the beginning of March‘15, post which stock entered in to a price correction mode, retraced more than 61.8% of move started from swing low of 677.15 to a life time high. In the said price correction, post making a climax low of 1016 in the mid of Feb‘16, stock witnessed smart recovery, which is still ongoing.



In end of May‘16 stock opened with huge gap of 91.35 points (1298.65-1390), which is still unfilled and rally continued till 1615 levels, post which prices witnessed profit booking towards its 200-DEMA, where it found support and bounced back again with spurt in volume. Technically, stock is well poised above its 200-DEMA and also managed to close above its 50 & 21-DEMA. On the technical setup, 14-period RSI found support near 40-levels during recent price correction which indicates bullish momentum support. While Bollinger Band (20/2) on weekly chart found support on its middle band and bounced back, reaffirms underlying strength in the counter.



Based on above technical observations we expect prices to move higher above recent swing highs and eventually move with further strength, over the coming month.



Our take: The stock price found support above its 200-DEMA and surging with spurt in volume indicates bullish momentum is likely to continue over coming sessions, which is likely to take prices higher over the coming month. Hence one may consider buying stock at current market price and average the stock price on any dip towards 1435 levels for the upside target of 1650 and 1680, placing a stop loss below 1385 levels.

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Stock

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

MARUTI

AUTO

5053.65

BUY

4830

4640

5470

5560

Key levels Moving averages

Support

Resistance

21 day EMA

4873.95

4890

5300

50 day EMA

4645.89

4830

5470

200 day EMA

4227.70

4640

5560



MARUTI is one of our preferred counters from the Auto sector. The stock has been an outperformer and generated more than 1.5 times returns in comparison to the benchmark Nifty Auto. The stock is in the cycle of higher highs and higher lows and is expected to continue its gains in the coming trading month.



The stock has given a “Bullish Flag Pattern” breakout on daily chart around 4980 levels on the back of robust volumes and made its all time high of 5103.90 levels. The stock has generated more than 60% in a short time frame of 3-4 months from the lows of 3193 levels and is expected to continue its momentum in the upcoming trading sessions.



On monthly chart the stock has given a V-Shaped recovery around 4690 levels which was well supported by more than average trading volumes. Even on weekly chart the stock has given a consolidation breakout around 4800 levels and retested the same affirming the bullish stance in the counter.



The Bollinger band (20, 2) is also rising on daily chart and price is trading above its upper band. Also there is no sign of any reversal in the stock suggest the inherent strength in the counter to take the price in an uncharted area. The stock is also trading well above its 21/50/100/200 day EMA levels on daily chart.



Among the indicators, parabolic SAR on daily chart is trading below the price, suggesting buying will remain intact with the counter in near term. Among the oscillators front, the 14-week RSI is witnessing upwards movement supporting our bullish stance.



Our take: The recent price action suggests that the positive momentum in the stock is likely to continue and the counter is expected to trade higher in the coming sessions. Thus, we recommend buying the stock for the targets of 5470-5560 levels and add further on any dip towards 4830 levels with a stop loss placed below 4640 levels.

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Stock RECLTD

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

BFSI

238.35

BUY

218

210

267

281

Key levels Moving averages

Support

Resistance

21 day EMA

225.97

213.74

241.02

50 day EMA

210.46

217.85

245.50

200 day EMA

202.91

211.10

260.80



RECLTD witnessed a cyclical downtrend from the high of 371.75 levels to a 52 week low of 152.25. After consolidating around those levels the stock has moved up breaking out of the consolidation and closed above the 38.2% retracement level of the said down trend indicating a possible reversal in trend.



The stock is trading well above its 21/50/100/200 day EMA levels in daily charts as well as in weekly charts indicating strength in the counter in all time frames.



On the daily charts the stock took support at mean and moving towards its upper end of the Bollinger band with band widening indicating the positive momentum in the stock. In weekly charts the price touched the upper band of Bollinger bands and the band is expanding supporting our bullish bias.



Among the leading indicators, Heiken candlesticks and parabolic SAR indicate positive trend in weekly chart and, while, 14 day RSI is quoting at 68.13 and is trading above the 9 period averages indicating positive momentum in the counter.

Our take: The recent price action suggests the momentum in the stock to continue in the coming month as well. Thus, we recommend buying the stock for targets of 267 and 281 levels with a stop loss placed below 210 levels.

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ValueMax

Stock

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

SBIN

BFSI

252.50

BUY

245

235

275

280

Key levels Moving averages

Support

Resistance

21 day EMA

244.32

245

265

50 day EMA

232.33

240

275

200 day EMA

218.22

235

280



SBIN is our preferable bet amongst the PSU banking. The stock has made the 52 week high at 260.40 levels soon after the satisfactory quarter number. Thereafter, the stock has seen profit taking from above discussed 52 week high. Which dragged the stock to the support of 244.25 levels and seen a decent bounce with supportive volume. Which suggest strong hands are accumulating the stock at current levels.



Currently the stock is in strong up trend after making low of 166.40 levels. Prior to that, the stock has seen sharp cut from the high of 336 levels which has dragged the stock to the low of 148.25 levels. After making low of 148.25 levels the stock has resumed it‘s up move and retraced 61.8% of the retracement levels drawn from the high of 336 levels to the low of 148.25 levels.



The stock is trading along with the upper band of the Bollinger band on weekly charts reflecting strength in the stock. Whereas, the Parabolic SAR is trading well below the price indicating up trend in the stock will remain intact in the counter.



Among the indicators, the 14-day RSI and MACD line is pointing northwards where the RSI is on the verge of given the positive crossover with 9 days signal line on daily charts indicating the strength in the counter. The stock is trading well above all major moving average on the daily charts reflecting strength in the counter.

Our take: The above discussed development suggests that the stock is well placed to take it up move which enhances the confidence amongst the market participants. Hence we are recommending buy in the stock for the target of 275- 280 levels in near term keepings stop loss of 235 levels. 

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Stock

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

TATAGLOBAL

FMCG

140.25

BUY

133

129

149

157

Key levels Moving averages

Support

Resistance

21 day EMA

138.74

137

145

50 day EMA

135.10

133

149

200 day EMA

129.71

129

157



Tata Global Beverages is engaged in the business of branded natural beverages — tea, coffee and water. With a long history and experience in the beverages market, and a heritage of innovation and development, the company has evolved from a predominantly domestic Indian tea farming entity to a marketing and brand-focused global organization.



TATAGLOBAL has been one of preferred pick in the FMCG pack. In the short time frame, the counter has given handsome returns of over 45% in a time span of seven trading months. The counter has been trading with bullish bias on the weekly charts with increasing number of trading volumes.



After making a panic low of 100 levels in the month of February 2016, the stock made smart pullback towards 140 plus levels surpassing its major moving averages on the daily charts. The stock also gave a sloping trend line breakout on the weekly charts drawn from the swing high of 162-163 levels. At current juncture, the stock is trading well above the said breakout levels after re-testing the same confirming our bullish bias on the counter.



On the other hand, analyzing the recent price, the volumes has been on the higher side from past few trading weeks indicating strong hands have started accumulating the stock at current levels. The stock looks poised to move higher in the coming days towards its recent sewing high of 149 levels and surpass the same.



On the indicator front, Parabolic SAR has been trading below the current market price of the stock indicating possible upside can‘t be ruled out in the short term period. Even the 14-Day RSI is trading in the comfortable zone affirming our bullish stance on the counter.

 take: Considering all the above data facts, we recommend short to medium term investors to enter the stock at the Our current levels for the potential targets of 149-157 levels. And any dips towards 133 levels can be utilized to average the stock keeping strict stop loss placed below 129 levels. 10

ValueMax Stock

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

TITAN

CD

418.50

BUY

400

385

455

475

Key levels Moving averages

Support

Resistance

21 day EMA

406.91

400

435

50 day EMA

401.32

395

455

200 day EMA

375.53

385

475



TITAN has witnessed a stellar rally from the February lows of 330-340 moving a whopping 25% in the last six months riding more or less on a linear rally. Post this move, the stock has been consolidating for a around eight weeks now trading in the range of 390-430 gearing up for the next leg of the move that is likely to unfold.



Fibonacci retracements drawn from the high of 448.40 to the low of 301.70 indicates that the stock has closed above the 61.8% mark on the weekly chart for several weeks making it a crucial support and suggesting the correction in the counter is probably over. The consolidation phase has been accompanied by good set of volumes, re iterating that the stock is being bought into setting it up for higher levels from a short term perspective.



On the indicator front, the daily RSI has generated a bullish crossover and is moving into the upper panel of the oscillator suggesting strength in the counter. The weekly RSI has only this week followed the same suit, re iterating providing confirmation for the positive trend making it an excellent opportunity to enter at current levels and ride the momentum.



The weekly price pattern has formed a Doji and a Hammer like pattern taking support at the 390 levels in the last two weeks. The two have been confirmed by a large bullish candle this week, suggesting the stock is likely breach on the higher side of the consolidation and clock fresh highs in the coming month. Adding to the above technical parameter, the price pattern is forming higher highs and higher lows on the daily chart and is well placed above the major moving averages buoyed by volumes, reiterating our positive stance in the counter.

Our take: Going forward, with the current technical set up of the stock, we expect the positive run to continue in the counter. Therefore, we recommend to ‗BUY‘ for the target of 455 and then 475 with stop loss placed below 385 for the month.

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KARVY RESEARCH DESK – STOCK BROKING JK Jain

Head Research

QUERIES & FEEDBACK Toll-Free: 1800 425 8283

Email ID: [email protected]

Karvy Stock Broking Limited ―Karvy Centre‖, Avenue-4, 2nd Floor, Road No: 10, Banjara Hills, Hyderabad – 500 034. India. Tel: 91-40-23312454; Fax: 91-40-23311968 .

Analyst Certification The following analyst(s), JK Jain, who is (are) primarily responsible for this report and whose name(s) is/ are mentioned therein, certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.

Disclaimer Karvy Stock Broking Limited [KSBL]is registered as a research analyst with SEBI (Registration No INH200003265 ). KSBL is also a SEBI registered Stock Broker, Depository Participant, Portfolio Manager and also distributes financial products. The subsidiaries and group companies including associates of KSBL provide services as Registrars and Share Transfer Agents, Commodity Broker, Currency and forex broker, merchant banker and underwriter, Investment Advisory services, insurance repository services, financial consultancy and advisory services, realty services, data management, data analytics, market research, solar power, film distribution and production, profiling and related services. Therefore associates of KSBL are likely to have business relations with most of the companies whose securities are traded on the exchange platform. The information and views presented in this report are prepared by Karvy Stock Broking Limited and are subject to change without any notice. This report is based on information obtained from public sources , the respective corporate under coverage and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of KSBL. While we would endeavor to update the information herein on a reasonable basis, KSBL is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent KSBL from doing so. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. KSBL will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. 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 KSBL nor any associate companies of KSBL accepts any liability arising from the use of information and views mentioned in this report. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Past performance is not necessarily a guide to future performance. Forward-looking statements are not predictions and may be subject to change without notice. Actual results may differ materially from those set forth in projections. • Associates of KSBL might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. • Associates of KSBL might have received compensation from the subject company mentioned in the report during the period preceding twelve months from the date of this report for investment banking or merchant banking or brokerage services from the subject company in the past twelve months or for services rendered as Registrar and Share Transfer Agent, Commodity Broker, Currency and forex broker, merchant banker and underwriter, Investment Advisory services, insurance repository services, consultancy and advisory services, realty services, data processing, profiling and related services or in any other capacity. • KSBL encourages independence in research report preparation and strives to minimize conflict in preparation of research report. • Compensation of KSBL‘s Research Analyst(s) is not based on any specific merchant banking, investment banking or brokerage service transactions. • KSBL generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. • KSBL or its associates collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. • KSBL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report and have no financial interest in the subject company mentioned in this report. • Accordingly, neither KSBL nor Research Analysts have any material conflict of interest at the time of publication of this report. • It is confirmed that KSBL and Research Analysts, primarily responsible for this report and whose name(s) is/ are mentioned therein of this report have not received any compensation from the subject company mentioned in the report in the preceding twelve months. • It is confirmed that JK Jain, Research Analyst did not serve as an officer, director or employee of the companies mentioned in the report. • KSBL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. • Neither the Research Analysts nor KSBL have been engaged in market making activity for the companies mentioned in the report. • We submit that no material disciplinary action has been taken on KSBL by any Regulatory Authority impacting Equity Research Analyst activities.

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