Research Desk –Stock Broking India

ValueMax

AUGUST 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 August 2016.

Stock

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

ASHOKLEY

AUTO

95.25

Buy

92

89

102

106

AXISBANK

BANKING

546.15

Buy

518

498

600

620

BPCL

ENERGY

592.65

Buy

568

540

650

685

FMCG

922.55

Buy

885

845

1000

1025

INFRATEL

TELECOM

395.4

Buy

380

360

435

443

LICHSGFIN

BFSI

520

Buy

495

480

565

580

PHARMA

829.95

Buy

790

760

900

930

METAL

355.05

Buy

332

320

390

405

IT

2619.3

Buy

2505

2400

2835

2920

CEMENT

3718.2

Buy

3500

3395

4095

4200

HINDUNILVR

SUNPHARMA TATASTEEL TCS ULTRACEMCO CMP: Current Market Price;

SL: Stop Loss;

Tgt: Target

Note: All charts are sourced from Spider Software.

1

ValueMax

Stock

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

ASHOKLEY

AUTO

95.25

Buy

92

89

102

106

Key levels Moving averages

Support

Resistance

21 day EMA

95.39

93

99

50 day EMA

97.74

91

102

200 day EMA

94.34

89

106



ASHOKLEY has lost around 1.50% during the week whereas NIFTY AUTO has almost gained 2%. During the month, the stock has given a negative return of 3.15%; significantly underperforming the Auto index i.e. NIFTY AUTO which has gained 6.85% month on month basis. The stock is expected to outperform in the coming sessions.



The stock had fallen from its 52-week highs of 112.90 levels clocked in the month of April‟16 and slipped towards 8990 levels, where its 50-DEMA was placed on the weekly charts. The stock has taken support at the lower levels and has built a base and is likely to resume its upward journey towards 102-106 levels in the coming sessions. The stock has consolidated for around 2 months in the range of 90-100 levels. The volume witnessed in the stock during the consolidation phase was decent, signaling accumulation in the counter at the lower levels.



The stock is trading above its 200- DEMA levels on the daily charts and above its 50/100/200-DEMA on the weekly charts indicating strength in the counter.



Among the indicators, the 14-day RSI has already given a positive crossover with 9-day signal line and is pointing northwards on the daily 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 102-106 levels and add further on any dip towards 92 levels with a stop loss placed below 89 levels.

2

ValueMax

Stock AXISBANK

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

BANKING

546.15

Buy

518

498

600

620

Key levels Moving averages

Support

Resistance

21 day EMA

545

530

560

50 day EMA

529

518

600

200 day EMA

489

498

620



Axis Bank has rallied a whopping 57% from its February lows of 365-370 in a span of five months outperforming the bench mark index Bank Nifty, that has moved up around 42% in the same time period. The last month witnessed a subdued movement in the counter with the largest fall coming in the penultimate week of July. However the positive trend in the stock is still intact and the stock looks poised to continue its bullish trend in the near future.



Fibonacci retracements drawn from the high of 654.90 to the low of 366.75 indicates that the stock has closed above the 61.8% mark on the weekly chart suggesting the correction in the counter is probably over. This move is accompanied by above average set of volumes, re iterating that the stock is being bought into at lower levels making it an excellent opportunity to enter the stock at current levels.



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. With the current chart structure and recent correction witnessed in the counter along with the lucrative risk reward ratio, the stock can be bought to gain from a short term perspective.



An upward slopping support trend line drawn from the low of 374 on the weekly chart is holding as strong support and has not been negated indicating the upward momentum is likely to continue. On the indicator front the daily RSI is mirroring the price pattern move and the weekly RSI is on the verge of generating a bullish crossover providing further technical evidence.

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 600 and then 620 with stop loss placed below 498 for the month.

3

ValueMax

Stock

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

BPCL

ENERGY

592.65

Buy

568

540

650

685

Key levels Moving averages

Support

Resistance

21 day EMA

565.10

580

601

50 day EMA

533.9

565

632

200 day EMA

472.16

541

690



BPCL is one of our preferred counter in the oil and gas space The counter has been an outperformer on the monthly basis and generated more than 1.5 times more returns in comparison to the benchmark Nifty Energy. The stock is making higher highs and higher lows on daily and weekly charts and also the stock surged nearly 10.50% in the past one month



The stock is making higher highs and higher lows on all major time frames and also has given breakout from a broad range of between 480-380 levels and made its all time high of 601.85 which indicates buyers overpowered the sellers and surged the stock to the higher levels on closing basis.



The stock has given breakout from “BULLISH FLAG PATTERN “near 458 levels and retested the said levels and made its all time high of 601.85 on daily chart with more than average volume confirmed the pattern significance. The stock has seen strong buying interest from past two months and outperformed its peer group significantly suggest strength in the counter.



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) in daily 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 (70.37) and there is no sign of any reversal this supports our bullish stance in this counter.

Our take: Considering all the above data, we recommend traders to enter the stock at the current levels for targets of 680 and 685 levels and any correction towards 572 can be utilized to average the stock keeping stop loss below 540 levels on end of the day basis.

4

ValueMax

Stock

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

HINDUNILVR

FMCG

922.55

Buy

885

845

1000

1025

Key levels Moving averages

Support

Resistance

21 day EMA

906.51

895

950

50 day EMA

891.53

870

980

200 day EMA

859.71

850

1030



HINDUNILVR Ltd. is India‟s largest FMCG Company, with leadership in various categories. In the long term stock price is in a secular bull trend, with typical behaviour of intermittent price correction after a steady run, eventually which gives an excellent opportunity to accumulate stock.



The stock price clocked an all time high of 981 in the beginning of March‟15, post which stock entered in to a prolonged consolidation mode, tested the patience of market participants. Structurally, in the phase of consolidation stock price retraced almost 50% of move started from the swing low of 537 to an all time high. In the last few months‟ stock formed a higher-high, higher-low in short to medium term price chart, exhibiting revival in the stock movement. Also month on month basis moreover stock moved in line with NIFTY FMCG Index.



Technically, stock is well poised above its 200 & 50-DEMA and meandering above its 21-DEMA. Notably, during an entire phase of consolidation 14-period weekly RSI managed to sustain in bullish territory 40-level, and that is also being supported by price action, where we see more of time consolidation and less of price correction; and currently RSI is poised to surge towards overbought territory. Also on the weekly time frame chart MACD (12/26/9) has witnessed Bullish Crossover above signal line, reaffirming underlying strength in the counter.



Based on above technical observations we expect prices to retest it‟s all time high and eventually move in to an uncharted territory, over the coming month.



Our take: The stock price found support above its 50-DEMA and surging with spurt in volume indicates bullish momentum is likely to continue over coming sessions, which may take prices higher to retest its life time high and eventually enter into an uncharted territory over the coming month. Hence one may consider buying stock at current market price and average the stock price on any dip towards 885 levels for the upside target of 1000 and 1025, placing a stop loss below 845 levels.

5

ValueMax

Stock INFRATEL

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

TELECOM

395.4

Buy

380

360

435

443

Key levels Moving averages

Support

Resistance

21 day EMA

364.83

380

443

50 day EMA

636.49

374

435

200 day EMA

374.76

360

420



INFRATEL has been making higher highs and higher lows on the weekly chart and given a downward trend line breakout on decent volumes suggesting upward movement from the current level.



The stock has moved above its 200 DEMA on the daily charts, breaching its immediate resistance of 410 and moved higher. There was some correction seen on the last trading sessions from the high indicating good opportunity for taking position in the stock. Similarly, on weekly chart the stock is trading above 21 DEMA/50 DEMA/ 100 DEMA and 200 DEMA.



On the Bollinger Band set up on weekly chart, the stock has touched its Bollinger band upper band and the band is widening indicating the volatility has increased and the price action supports the current positive momentum is likely to continue in the stock.



Among the indicators, the 14-day RSI has reached the overbought zone mirroring the price movement. The Parabolic SAR on the same time frames is comfortably trading below the price which reflects the buy in the counter will remain intact in near term.



On the derivative front, rollover in the current expiry is close to its 3 months average with positive price trend. Closure of around 25% can be seen in the stock merely on the account of profit booking and the upcoming buy back. Further, fresh longs have been witnessed in the August series suggesting positive momentum to continue.

 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 443 and while any correction into the said trading range can be utilized to average the stock keeping stop loss below the consolidating range of 360.

6

ValueMax

Stock LICHSGFIN

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

BFSI

520

Buy

495

480

565

580

Key levels Moving averages

Support

Resistance

21 day EMA

508.18

5005

550

50 day EMA

493.85

495

565

200 day EMA

469.92

480

580



The stock is in uptrend and making higher highs and higher lows on the weekly charts. The stock has made the life time high of 538 levels and witnessed a profits taking from the said levels after the announcement of Quarter results on 15 July 2016. The profits taking from the high of 538 levels has placed the counter to the low of 501 levels in span of three trading session.



Thereafter, the stock has bounced and currently trading in the consolidation range of 510- 524 levels, the bounce above the said consolidation range will enhance the confidence among the market participants.



The stock has closed the month with the gain of 5.05% and outperformed the Nifty which has closed the months with the positive return of 4.23%. The stock has given the breakout above the 515 levels on the monthly charts and closed the months well above the same. The recent development and the breakout on the monthly charts is the fresh trigger to the stock which suggests the stock is well placed to take it up move.



Among the indicators, the 14-day RSI and MACD line is pointing northwards where the RSI has given the positive crossover with 9 days signal line on daily charts indicating the strength. Whereas the MACD is trading above the equilibrium line and trading comfortably in the buy territory which enhance the confidence in the buy side of the stock.

 Our take: The above said breakout with supportive volume in the stock is a fresh trigged to the stock which reflects that the stock is well placed to take it up move. Hence, we recommend buy in the stock keeping stop loss of 480 for the target of 565- 580 levels.

7

ValueMax

Stock SUNPHARMA

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

PHARMA

829.95

Buy

790

760

900

930

Key levels Moving averages

Support

Resistance

21 day EMA

790.83

810

870

50 day EMA

783.76

790

915

200 day EMA

808.31

760

930

th



SUNPHARMA is the World‟s 5 largest specialty generic pharmaceutical company and one of our preferred counter from the pharma space. The stock has outperformed NIFTYPHARM during the last month and has generated 8.76% return whereas the NIFTYPHARM closed with a positive return of 4.98%. Currently the stock is 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.



The stock has seen significant bounce towards 839.80 levels after making low of 710.15 levels on 07 June 2016, which is nearly 18% reflecting uptrend in the stock will remain intact in near term. The bounce from the above said level has taken support of lower band of Bollinger band on weekly chart. Currently the stock is trading above mean price and the price action heading towards the upper band of the Bollinger band, support our bullish view in the counter.



Among the indicators and oscillators, the 14-day RSI is trading above its 9-day signal line and is pointing northwards, clearly indicating the bullish trend in the stock is likely to continue and the counter is expected to head higher in the near term. The Parabolic SAR (Stop & Reverse) is placed well below the price on daily 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 heading towards the mention targets.

th

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 900-930 levels in the near term keeping stop loss of 760 levels.

8

ValueMax

Stock

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

TATASTEEL

METAL

355.05

Buy

332

320

390

405

Key levels Moving averages

Support

Resistance

21 day EMA

351.97

340

370

50 day EMA

340.53

332

390

200 day EMA

309.42

320

405



TATASTEEL is one of our preferred counters from the metal space. The stock has bounced back from the lows of around 200 levels and since then is in the cycle of higher highs and higher lows. The stock is expected to trade higher in the coming sessions towards 390-405 levels. The stock surged more than 10% during the last month.



On the weekly chart, the stock has witnessed a “Cup & Handle” pattern breakout which was well supported by robust volumes suggesting strength in the counter to continue. Also, in the last trading week the stock has retested its neckline making an opportunity for investors to buy the stock at lower levels for greater returns. On the oscillator front, the 14 day RSI is trading around 60 levels supporting the bullish stance in the counter.



On the daily chart, the stock is placed well above the unfilled gap which was made on 13 July 2016, around 343-345 levels and is also placed above most of its major moving averages indicating inherent strength. On the other hand, the stock is placed at the mean of the Bollinger (20,2) placed at 350 levels on the daily chart suggesting it to be a strong support for the stock and also affirming our bullish stance on the counter from short to medium term perspective.



On the derivatives front, rollover in the current expiry is close to its 3 months average with positive price trend. Closure of more 20% can be seen in the stock merely on the account of profit booking.

th

Our take: The recent price action suggests that the 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 390-405 levels and add further on any dip towards 332 levels keeping a stop loss placed below 320 levels.

9

ValueMax

Stock TCS

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

IT

2619.3

Buy

2505

2400

2835

2920

Key levels Moving averages

Support

Resistance

21 day EMA

2534.08

2550

2680

50 day EMA

2526.83

2505

2835

200 day EMA

2485.50

2400

2920



TCS has been one of the outperformer in the overall IT pack after it declared better than expected quarterly results in comparison with its large cap peers. The stock has been trading with positive bias since then even in the volatile market conditions. The stock has taken support around 2400-2420 levels which was its pervious swing low made in the month of April 2016 and continued its northward journey in the last month.



On the daily charts, the counter has been forming higher highs and higher lows from past few trading sessions and is on the verge of giving sloping trend line breakout above 2630-2650 levels drawn from the all time high levels of 2839.70.On the other hand, the stock is also rolling on the upper band of the Bollinger indicating the positive momentum in the counter is likely to continue in the near term.



On the weekly time frame chart, the stock is looking bullish and has formed two long bullish candles with good trading volumes indicating strong hands has started picking the counter around lower levels.



Among the indicators, parabolic SAR 14 day RSI is trading in the comfortable zone suggesting positive sentiment in the counter. Even the stock is trading well above its major short to medium term moving average indicating inherent strength.



On the other hand, we expect the counter to continue its upwards momentum in the coming weeks as well and may enter the uncharted territory surpassing its all time high levels. We also expect the stock to outperform its peers in the coming trading month on grounds of good earnings in the last quarter.

Our take: On the basis of the above mentioned technical data, the counter is looking bullish for the time frame of 3-4  weeks and may test 2835-2920 levels. On the other hand, any dips towards 2505 levels may be an excellent opportunity for the short to medium term traders to average the stock keeping strict stop loss at 2400 levels.

10

ValueMax Stock ULTRACEMCO

Sector

CMP

Action

Average

SL

Tgt 1

Tgt 2

CEMENT

3718.2

Buy

3500

3395

4095

4200

Key levels Moving averages

Support

Resistance

21 day EMA

3546.91

3400

3860

50 day EMA

3421.77

3200

4100

200 day EMA

3134.55

3070

4250



UltraTech Cement Limited is India's biggest cement company and India‟s largest exporter of cement clinker based in Mumbai, India. The company is part of the Aditya Birla Group and division of Grasim Industries. It has an annual capacity of 64 million tonnes. The export markets span countries around the Indian Ocean, Africa, Europe and the Middle East. The stock has outperformed NIFTY during the last week and has generated 2.16% return whereas the NIFTY was up by 1.14%.



UltraTech Cement has moved higher to its new high at Rs 3,739, up 2.6% on the National Stock Exchange (NSE) in otherwise subdued market, after it announced that it won two coal linkages from Dipka Mines (SCDG) in Chhattisgarh after participating in the auction of coal linkages.



Currently the stock is an 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.



Among the indicators and oscillators, the 14-day RSI has already given a positive crossover with 9-day signal line and is pointing northwards, clearly indicating the bullish trend in the stock is likely to continue and the counter is expected to head higher in the near term. 60 day CCI is plotting well above the 100 levels at 187 and 30-day MFI is plotting at 75 levels indicating the bulls are active in the stock. The Parabolic SAR (Stop & Reverse) is placed well below the price on daily chart, suggesting buying will remain intact in the counter in near term.

Our take: 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 its resistance levels over coming month. Therefore one may consider buying at current levels and average the stock price on any dip towards 3500 levels for the upside target of 4095 and 4200 over coming month, keeping stop loss below 3395 levels.

11

ValueMax

KARVY RESEARCH DESK – STOCK BROKING JK Jain

Head Research

QUERIES & FEEDBACK Toll-Free: 1800 419 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 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.



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 Analysts 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.

12

ValueMax 

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.

13