Research Desk –Stock Broking India
ValueMax
June 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 June 2016.
Stock
Sector
CMP
Action
Average
SL
Tgt 1
Tgt 2
ACC
CEMENT
1,529.05
Buy
1440
1390
1670
1720
AUROPHARMA
PHARMA
785.30
Buy
735
699
872
900
BAJAJAUTO
AUTO
2,618.35
Buy
2510
2400
2900
2950
BHARTIARTL
TELECOM
351.40
Buy
340
325
385
400
CAIRN
ENERGY
145.15
Buy
136
133
160
165
HDFC
BFSI
1,237.70
Buy
1200
1155
1346
1370
INDUSINDBK
BFSI
1,102.85
Buy
1049
1019
1200
1250
IT
1,248.65
Buy
1200
1149
1350
1400
JSWSTEEL
METAL
1,389.15
Buy
1300
1250
1540
1600
NTPC
POWER
143.15
Buy
138
134
153
158
INFY
CMP: Current Market Price;
SL: Stop Loss;
Tgt: Target
Note: All charts are sourced from Spider Software.
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ValueMax
Stock ACC
Sector
CMP
Action
Average
SL
Tgt 1
Tgt 2
CEMENT
1,529.05
Buy
1440
1390
1670
1720
Key levels Moving averages
Support
Resistance
21 day EMA
1462.30
1450
1555
50 day EMA
1419.43
1335
1575
200 day EMA
1375.56
1290
1650
ACC outperformed both Nifty and its sectoral index NIFTY COMMODITIES for the month of May 2016. The stock has gained 5.95% during the same period while NIFTY and NIFTY COMMODITY has gained only 3.95% and 1.84% respectively. The stock has witnessed a sharp rally from the lows of 1174 to the current levels of 1525 and recorded gains of more than 30% over last few months. With the said rally, the chart structure of the stock on all major time frames has changed to higher highs and higher lows indicating a start of fresh up trend in the counter. Adding to the strength the stock is also clocking fresh 52 week highs on daily basis. The stock also has given break out from a consolidation range of 1375-1480 with more than average volumes and is also sustaining well above it indicating a fresh strong up move in the counter.
On the volumes front, the stocks delivery volumes has picked up significantly over last few weeks, indicating participants interest in the stock has increased significantly. Even on the derivative front, the stock futures are witnessing good long rollovers over last two months. Hence we expect the stock to move towards its all time highs.
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 that the current positive momentum is likely to continue in the stock. Even on monthly charts the price has taken support from the lower band has just crossed its mean and is on the way to test upper band of Bollinger bands.
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 and weekly charts indicating the strength in the counter. 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.
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 1670 and all time highs of 1720, while any correction into the said trading range can be utilized to average the stock keeping stop loss below the consolidating range of 1390.
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ValueMax
Stock AUROPHARMA
Sector
CMP
Action
Average
SL
Tgt 1
Tgt 2
PHARMA
785.30
Buy
735
699
872
900
Key levels Moving averages
Support
Resistance
21 day EMA
769.59
755
825
50 day EMA
765.34
710
890
200 day EMA
746.42
695
940
The stock is in a secular bull trend from last many months and still ongoing trend of higher highs-higher lows on monthly charts is not violated, indicating inherent strength in the counter, and any technical pullback provides an excellent opportunity to accumulate stock on dips. At the same time stock price is consistently outperforming Nifty Pharma Index from last couple of months, where Index is posting negative returns month on month basis, while stock recovered smartly after price correction in line with broader market.
The stock has retraced by 38.2% from its rally from 69.18 levels to its all time high of 891.5 and again resumed its rally after taking support around 577 levels. Heiken candlesticks and Parabolic SAR also indicated a positive trend in the counter supporting the bullish bias.
The stock posted an all time high of 891 in end of Dec’15, from where it slew and made a swing low of 582 in end of Feb’16, post which it recovered quickly and regained the bullish momentum by forming higher highs. In recent past stock price retested its major 200-DEMA and rebounded with volume, currently its holds above the average and also hovering above its 21 & 50-DEMA, exhibiting support to price.
On the technical setup, 14-period weekly RSI is meandering above equilibrium level, gradually inching higher towards overbought territory which also indicates that stock has potential to rise further in the coming weeks.
Our take: The stock has recently tested its major moving average and rebounded, which provides an excellent opportunity to accumulate stock at current levels. We expect stock to retest it’s all time high and eventually move in 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 735 levels for the upside target of 872 and 900, placing a stop loss below 699 levels.
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ValueMax
Stock
Sector
CMP
Action
Average
SL
Tgt 1
Tgt 2
BAJAJAUTO
AUTO
2,618.35
Buy
2510
2400
2900
2950
Key levels Moving averages
Support
Resistance
21 day EMA
2502.88
2550
2650
50 day EMA
2465.11
2510
2970
200 day EMA
2403.67
2400
3010
The stock has closed the month with the gain of 5.02% and outperformed the Nifty Auto which has closed the month with the gain of 4.92%. The stock has given the “V” shape recovery on the daily charts with significant volumes. Prior to that, the stock has seen sharp fall from the high of 2614 levels which has dragged the stock towards the low of 2364 levels. Thereafter, the bounce from the said lower levels has taken five trading session to recouped its fall started from the high of 2614 levels, which reflects the strength in the counter and the stock is expected to continue its positive move.
The stock has faced the resistance on multiple occasions around 2595-2615 levels on weekly charts and finally the recent price action in the stock has given the breakout above said levels which reflects the strength, and the up move in the stock will remain intact in the near term.
The recent bounce in the stock has placed the stock above all its major moving averages, suggesting strength in the counter.
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 in the counter. The Parabolic SAR comfortably trading below the price which reflects the buy in the counter will remain intact in near term.
Our take: The recent breakout in the stock has given the fresh triggered to the stock which enhances the confidence amounts the market participants. Hence we are recommending buy in the stock for the target of 2900-2950 levels in near term keepings stop loss of 2400 levels.
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ValueMax
Stock BHARTIARTL
Sector
CMP
Action
Average
SL
Tgt 1
Tgt 2
TELECOM
351.40
Buy
340
325
385
400
Key levels Moving averages
Support
Resistance
21 day EMA
352.76
345
362
50 day EMA
349.35
337
385
200 day EMA
347.42
325
400
BHARTIARTL has lost more than 2.50% during the month of May; underperforming the broader index i.e. Nifty 50 on a month on month basis, where as Nifty 50 has given a whopping return of 3.96%.Whereas the stock has gained almost 1% so far during this week with decent volumes whereas Nifty 50 has gained 0.05%.
The stock has fallen sharply from its recent highs made on 28 April, 2016 of 385 levels towards 340 levels, correcting almost 12% from its highs. The stock has taken support around 339-342 zone on multiple occasions and has bounced back towards 355-357 levels. The stock didn’t fill the gap around 337-341 zone and bounced back from around 339 levels, signaling strength in the counter. The stock is expected to head towards its recent highs of 385 levels and beyond that towards 400 levels.
The stock is trading above its 21/50/100/200 DEMA levels on the daily charts as well as on weekly and monthly charts indicating inherent strength in the counter in all the said time frames.
Among the indicators and oscillators, the 14-day RSI has already given a positive crossover with 9-day signal line, clearly exhibiting bullishness in the counter is expected to continue and the stock is likely to trade higher in the near term.
th
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 once again in the coming sessions. Thus, we recommend buying the stock for the targets of 385400 levels and add further on any dip towards 340 levels with a stop loss placed below 325 levels.
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ValueMax
Stock
Sector
CMP
Action
Average
SL
Tgt 1
Tgt 2
CAIRN
ENERGY
145.15
Buy
136
133
160
165
Key levels Moving averages
Support
Resistance
21 day EMA
140.46
130.21
146.83
50 day EMA
141.02
137.07
154.57
200 day EMA
150.85
132.22
149.09
CAIRN has rallied from its 52 week low of 106.5 in January 2016 to 159.6 in March 2016 and retraced by nearly 50% of the rally around 133 levels and closed above 38.2% retracement of the rally indicating the end of correction. The stock has given a breakout from this consolidation after 21 trading sessions with good volume indicating a possible fresh leg of rally in the counter.
The stock is trading well above its 21/50/100 DEMA levels in daily charts indicating strength in the counter in short to medium time frames. MACD in daily charts is moving northwards with widening bands also indicates positive bias in the stock
On the daily charts the stock has touched its Bollinger band upper band and the band is widening indicating the positive momentum in the stock. In weekly charts the price is moving above mean to test upper band of Bollinger bands.
Among the indicators, Heiken candlesticks are indicating beginning of a fresh leg of rally in the weekly and strong positive trend in daily chart. While, RSI is showing positive breakout with 14 period line moving above the 9 period line in weekly as well as daily chart..
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 160 and 165 levels with a stop loss placed below 133 levels.
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ValueMax
Stock
Sector
CMP
Action
Average
SL
Tgt 1
Tgt 2
HDFC
BFSI
1,237.70
Buy
1200
1155
1346
1370
Key levels Moving averages
Support
Resistance
21 day EMA
1191.58
1222
1269
50 day EMA
1163.40
1190
1320
200 day EMA
1171.24
1140
1390
HDFC is one of our preferred counter in the financial space. The counter has been an outperformer on the monthly basis in comparison to the benchmark Nifty services. The stock is making higher highs and higher lows on all major time frames and also stock surged nearly 14% in the past one month.
The stock has given breakout from “FALLING RECTANGLE CHANNEL “near 1185 levels on monthly chart with more than average volume confirmed the pattern significance. The stock has seen strong buying interest from past two month and outperformed its peer group significantly suggest strength in the counter.
On the daily chart, the stock has given horizontal trend line breakout from 1220 and retested the said level . The Bollinger band(20,2)is also rising on weekly chart and price is trading above its upper band of the B0llinger band suggest the strength in the counter. The stock is 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(57.21) has given a positive crossover to 9 period moving averages and this supports our bullish stance in this counter.
From the above observations it is evident that stock is likely to surge higher and move towards its resistance levels by next month.
Our take: Considering all the above data, we recommend traders to enter the stock at the current levels for targets of 1346 and 1370 levels and any correction towards 1200 can be utilized to average the stock keeping stop loss below 1255 levels on end of the day basis.
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ValueMax
Stock INDUSINDBK
Sector
CMP
Action
Average
SL
Tgt 1
Tgt 2
BFSI
1,102.85
Buy
1049
1019
1200
1250
Key levels Moving averages
Support
Resistance
21 day EMA
1067.01
1070
1150
50 day EMA
1020.66
1040
1180
200 day EMA
937.84
990
1250
The stock is in a multiyear bull trend and had been consistent in making higher highs and higher lows on monthly chart from last many years. Also the stock has breached out from its consolidation range, ranging from 830 levels on the downside to 980 levels on the upside on monthly chart which was well supported by volumes, suggesting strong hands accumulating the stock.
On weekly chart the stock is comfortably trading above its short, medium and long term exponential moving averages. The stock has been comfortably trading with positive bias from past few trading weeks and has been making higher highs for almost every week clearly indicating that the stock is very strong.
On daily chart the stock is well placed above all its major moving averages (21, 50, 200 DEMA) indicating the stock to be in a bull run. The stock has also outperformed its broader index Nifty Bank in their bull run for the past trading month indicating the stock to be a strong contender among the banking sector.
RSI on weekly chart is pegged at sub 60 levels, indicating the bullish momentum to continue for the near term. Even the MACD positive crossover also supports our bullish view into the counter. On the other hand, the counter is also rolling on the upper band of the Bollinger (20,2) on the daily chart affirming our bullish stance on the counter for medium to long term perspective. Even the Parabolic SAR is trading well below the current market price of the stock suggesting inherent strength.
Our take: From last few sessions the stock is comfortably trading above all its major resistance with decent rise in trading volumes. This provides an excellent opportunity to accumulate stock at current levels for a potential upside target of 1200 and 1250 levels over the next one month, while any dip towards 1049 levels should be utilized to average the stock price, keeping stop loss below 1019 levels.
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ValueMax
Stock
Sector
CMP
Action
Average
SL
Tgt 1
Tgt 2
INFY
IT
1,248.65
Buy
1200
1149
1350
1400
Key levels Moving averages
Support
Resistance
21 day EMA
1217.47
1200
1350
50 day EMA
1199.71
1180
1370
200 day EMA
1136.15
1150
1400
In the previous month Infosys outperformed Nifty IT. On a monthly basis the stock has gained around 3.36% whereas the index has gained only a meager 1.78%
The stock has given a breakout on the charts from the consolidation range of 1090-1150 range in which it was trading for quite a few months. The breakout has came with decent volumes. Thereafter the stock is trading in an upward sloping channel forming higher highs and higher lows.
The stock is in the cycle of higher highs and higher lows on the charts which suggest that the stock’s uptrend has some inherent strength in it
Currently the stock is trading above all its major moving averages which suggest that the stock has some strength in it.
RSI on weekly chart is pegged around 62.27 levels, indicating the stock is away from its overbought territory and currently the 14-month RSI is trading around 66 levels which is still not in the overbought zone. On weekly charts 14 periods RSI has crossed its resistance around 60.79 levels which it was not able to cross on the previous occasion is technical evidence forgoing long on this counter.
Our take: Considering all the above data facts, we recommend short to medium term investors to enter the stock at the current levels for targets of 1350-1400 zones and any correction towards long term moving averages can be utilized to average the stock keeping stop loss below 1149 levels.
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ValueMax
Stock
Sector
CMP
Action
Average
SL
Tgt 1
Tgt 2
JSWSTEEL
METAL
1,389.15
Buy
1300
1250
1540
1600
Key levels Moving averages
Support
Resistance
21 day EMA
1326.86
1350
1500
50 day EMA
1285.79
1300
1600
200 day EMA
1119.65
1260
1700
JSWSTEEL witnessed a minor change in price on closing basis and gained 1.15 % month on month while on weekly basis the stock gained around 1%.
On monthly charts the stock has been trading at six months high and has been making higher lows from last 3 months. In last trading month the stock has high trading volume over its preceding months which clearly indicate that the stock has witnessed significant buying and can give significant up move in coming weeks.
On weekly charts the stock has given a breakout above its major resistance levels placed around 1380 and has closed at 1389 levels after making a life time high of 1403.The stock witnessed significant rise in trading volume in last trading session which can indicate massive up-move in coming days.
On daily charts the stock is making higher tops and higher bottoms clearly suggesting that the stock is in sustainable bull trend. It is also trading above its major exponential moving averages which also suggest the bull momentum is likely to continue in coming days.
Bollinger Band (20, 2, S) set up on daily and weekly chart has started to expand and currently the stock is trading near the upper BB indicating the volatility expansion on the higher side. The 14 period RSI on daily and weekly charts is pegged at 67 and 70 levels, indicating the stock has not yet been over bought.
Our take: Considering all the above data facts, we recommend short to medium term investors to enter the stock at the current levels for targets of around 1540 and 1600 levels and any correction towards 1300 can be utilized to average the stock keeping stop loss below 1250 levels.
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ValueMax Stock
Sector
CMP
Action
Average
SL
Tgt 1
Tgt 2
NTPC
POWER
143.15
Buy
138
134
153
158
Key levels Moving averages
Support
Resistance
21 day EMA
139.47
138
148
50 day EMA
136.48
136
153
200 day EMA
134.28
133
158
NTPC has given breakout on the weekly charts from downward trendline on decent volume and has closed above that trendline. After being in downtrend for almost an year the stock has finally breached the trendline and gave closing above that.
Prior to this breach the stock crossed this downward trendline couple of times but corrected from there, retesting the levels again. On the weekly chart, the stock is well placed above its 21 DEMA, 50 DEMA and 100 DEMA signalling buying in the stock.
Moreover, 14 day RSI on the monthly chart did not breach its support level of 39 and rebounded from there moving above the signal line. At present RSI is indicating level of 52 suggesting plenty of room upwards for the stock to move in the coming month. Further MACD on the monthly chart has also given breakout above its signal line indicating strength in the stock.
On the monthly chart, the stock is placed above the mean of the Bollinger band and on the weekly chart Parabolic SAR is placed below the price, suggesting buying will remain intact with the counter in near term.
On the deliverable front, it can be noticed that the deliverable to traded quantity has been above 50% throughout the month signalling continuous buying in the stock. From the above observations it is evident that stock is likely to surge higher and move towards its resistance levels by next month.
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 the targets of 153-158 levels in the near term keeping a stop loss of 134 levels.
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ValueMax
KARVY RESEARCH DESK – STOCK BROKING JK Jain
Head Research
QUERIES & FEEDBACK Toll-Free: 1800 425 8283
Email ID:
[email protected]
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ValueMax
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