Research Desk StockBroking India ValueMax June 01, 2017 ValueMax Monthly Investment Ideas ValueMax helps clients to take a long stance on stocks from thes&pbse-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 will be made available to the dealers and relationship managers through Karvy Mail. A brief technical report on the ideas will also be released, justifying our view on the stocks and the reason for the selection. The report will also be uploaded on Karvy online websites. Book profit/exit messages will be communicated during the LIVE market on NEST (trading terminal) under the head ValueMax. Please find the ValueMax investment ideas for June 2017. ACC CEMENT 1637.05 Buy 1517 1446 1876 1924 AXISBANK BFSI 514.05 Buy 495 470 570 600 BRITANNIA FMCG 3532.65 Buy 3360 3270 3798 3870 HINDALCO METAL 200.7 Buy 191 182 220 228 LICHSGFIN BFSI 734.1 Buy 690 660 810 840 POWERGRID UTILITIES 207.95 Buy 196 187 230 240 RELIANCE ENERGY 1340.7 Buy 1290 1259 1423 1480 TATACHEM CHEMICALS 628.3 Buy 600 575 685 705 TATACOMM TELECOM 730.35 Buy 700 675 790 820 TATAMOTORS AUTO 476.15 Buy 455 438 515 533 CMP:Current Market Price; SL: Stop Loss; TGT: Target Note: All charts are sourced from Spider Software. 1
ACC CEMENT 1637.05 BUY 1517 1446 1876 1924 21 day EMA 1631 1575 1756 50 day EMA 1578 1500 1876 200 day EMA 1492 1446 1924 ACC witnessed a cyclical uptrend from the low of 1256.55 levels forming higher highs and higher lows in daily chart and has broken the highest point of its previous cycle of 1736.4 and has retraced to 38.2% Fibonacci retracement level of the rally and bounced back to just above its 21 DEMA levels of the rally indicating underlying strength in the stock. The stock is trading well above all of its major moving average 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 lower band and moving towards its Bollinger band mean indicating the positive momentum in the stock. Among the leading indicators, parabolic SAR indicate positive trend in weekly chart and, while, 14 period RSI is quoting at 64.58 and is trading above the 9 period averages indicating positive momentum in the counter. Stock has given breakout with a gap in monthly chart (1450-1453.15),which is a very rare scenario, supporting our bullish conviction about the stock. 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 1876 and 1924 levels with a stop loss placed below 1446 levels. 2
AXISBANK BFSI 514.05 BUY 495 470 570 600 21 day EMA 507 507 525 50 day EMA 504 495 570 200 day EMA 499 470 600 Axis Bank Ltd is the third largest of the private-sector banks in India and one of our preferred counters from the banking space. Currently the stock is in uptrend and trading well above its 21/50/100/200 EMA 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 on daily as well as on weekly chart and is poised with bullish bias, 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. The MACD is trading above the signal line in buy territory on daily chart indicating positive momentum in the stock in near term. On the Bollinger Band set up on daily chart, the stock is trading near middle band of Bollinger Band and the band is widening, indicating that volatility has increased and the price action support that the current positive momentum is likely to continue in the stock. From the above observations it is evident that stock is likely to surge higher and outperformed its peers in coming trading weeks and move higher 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 the targets of 570 and 600 levels and any correction towards 495 can be utilized to average the stock keeping stop loss below 470 levels. 3
BRITANNIA FMCG 3532.65 BUY 3360 3270 3798 3870 21 day EMA 3538 3400 3650 50 day EMA 3470 3360 3798 200 day EMA 3230 3270 3870 BRITANNIA has been in a structural uptrend making higher highs and higher lows on weekly charts with bullish upward trend from few trading weeks not breaching the crucial support zones after the recent profit booking and also trading well above its medium to long term moving averages on the daily charts. After making swing low of 2772.85 levels in the month of December 2016, the stock witnessed a one sided up move with spectacular momentum coupled by notable trading volumes clocking fresh all time highs of 3799.50 levels in the month of May 2017. The stock has undergone a round of profit booking from higher levels and has witnessed buying interest on every decline making the technical set up on the bullish side. On the other hand, the 14 day RSI showing reading in the comfortable zone, clearly indicating the bullish trend is likely to remain intact in the counter. In the short term time frame, analyzing the price volume action, the stock seems to be extremely poised to move higher towards the psychological mark of 3800-3870 levels. The Bollinger band (20, 2) on the daily charts is also pointing northwards with price trading on its lower band indicating the direction of the counter is on the long side with supports on the lower band and is all set to move towards the upper band of the Bollinger. The counter has also retested the breakout levels of the sloping trend line breakout drawn from the swing high 3584.25 levels to the 3400 levels on the daily charts. On the other hand, the overall chart structure of the counter seems to be bullish as the stock is trading above its previous breakout levels of 3350-3400 levels, while dips towards the recent support levels of 3350-3360 may be utilized to average the stock. We expect the stock continue the upside momentum towards its all time high levels and also surpass the same. Our take: Taking the above the data facts in to the consideration, we recommend short term traders to enter the stock at the current levels for the potential targets of 3798-3870 levels. Any dip towards the 3360 levels can be utilized to average the stock, with a strict stop loss placed below 3270 levels. 4
HINDALCO METAL 200.70 BUY 191 182 220 228 21 day EMA 195 191 210 50 day EMA 192 186 220 200 day EMA 172 182 228 HINDALCO has given breakout from its consolidation range of 180-204 in which it was trading from starting of the year. Breakout volume has been decent suggesting positive momentum in the stock would continue in the coming trading sessions. Over the past one month the stock has been giving higher closing and taking crucial support at its 100 DEMA. On the daily chart the stock has closed above all its near term moving averages. After taking support from around 185 levels, the stock has rebounded making higher highs and higher lows. On weekly chart 14 day RSI continues to hold its support level of 52.60, rebounding from the same level and closing above the 9 day EMA. Further on the indicators front, MACD setup on daily and weekly charts is trading in the positive territory 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. 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: We expect the stock to continue its strong uptrend from the current levels. At the current levels one may buy stock, while any dip towards 191 levels can be utilized to average the stock price, for the higher target of 220 and 228 levels, keeping stop loss below 895 levels. 5
LICHSGFIN BFSI 734.10 BUY 690 660 810 840 21 day EMA 689 710 780 50 day EMA 660 690 810 200 day EMA 586 660 840 LICHSGFIN has gained more than 4% during the week till date whereas NIFTY 50 has gained around 0.27%. During the month, the stock has given a positive return of 9.75%; significantly outperforming the broader index i.e. NIFTY 50 which has given a return of 3.41% month on month basis. The stock is expected to continue to outperform in the coming trading sessions. The stock has clocked fresh life time high of 738.70 levels in the last trading session, surpassing its previous high of 727.50 levels clocked on 5 th May, 2017. The stock witnessed profit taking at the higher levels which dragged the stock towards 660-663 levels, correcting almost 9% from its highs of 727.50 levels. The stock has found support at the lower levels and bounced back towards 735-738 levels with supportive volumes. The upward journey is likely to remain intact in the counter and it is expected to trade in unchartered territory in the coming trading sessions. The stock is trading above its 21/50/100/200-DEMA on the daily and weekly charts indicating strength in the counter. Among the indicators, the 14-day RSI has already given a positive crossover with the 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, re-iterating 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 810-840 levels and add further on any dip towards 690 levels with a stop loss placed below 660. 6
POWERGRID UTILITIES 207.95 BUY 196 187 230 240 21 day EMA 205 200 214 50 day EMA 203 196 230 200 day EMA 189 187 240 The overall chart structure of the stock suggests formation of higher tops and higher bottoms on the monthly timeframe, clearly indicating that the stock is in uptrend after clocking a low at 120.5 levels in the month of September 2015. The stock at present is moving in an upward sloping channel validating the uptrend. After hitting an all time high at 213.8 levels, the stock recently corrected towards 195-196 levels and witnessed an excellent bounce towards 210 levels indicating the inherent strength in the counter providing an opportunity to enter in dips. In its current correction stock has found support above the mean of weekly Bollinger band (20, S, 2) and formed a base around it before commencing its fresh up move. Adding to that, on the daily Bollinger band (20, S, 2) the stock found support on the lower band during the said consolidation. The stock is trading above its medium term100 day EMA and long term 200 day EMA and currently hovering around 100 day EMA and formed the base for an up move. The daily RSI 14 day (58.43) trading above its signal line (53.62) indicating the bullish bias in the counter. The daily CCI-60 has been observed taking support of the zero line during the consolidation and is currently having a reading of 72.95 which indicates bullish bias being still intact. Among other technical observations, DMI on daily chart is showing a bullish signal as the plus DMI is above the Minus DMI indicating medium and long term up trend is intact. Our take: We expect the stock to resume its strong uptrend from here and hence any declines could be utilized for fresh long accumulation. We expect the stock to initially rise till 230 levels and weekly close above it may march it towards the 240 levels. 7
RELIANCE ENERGY 1340.70 BUY 1290 1259 1423 1480 21 day EMA 1341 1320 1390 50 day EMA 1321 1290 1424 200 day EMA 1175 1265 1450 The overall chart structure of the stock suggests formation of higher tops and higher bottoms on the monthly timeframe, clearly indicating that the stock is in a secular uptrend. The stock had a stellar rally from the lows of 1012.80 made in January 2017 to the high of 1467.75 in April 2017; a span of 3 just months. Thereafter the stock went into correction mode and corrected around 38% of its rise and corrected till the lows of 1295.10 registered on 24Th May 2017. The stock has come out of downward sloping trendline drawn from connecting the highs of 1467.75 made on 25 th April 2017 to the secondary high of 1376.90 made on 16 th May 2017 which indicates that the correction is over and the stock is ripe for continuation of the larger up trend. The stock is trading above its medium 100 day EMA and long term 200 day EMA and currently just trading above its short term moving average (50EMA) forming base for an up move. The daily RSI 14 day (50.01) is trading above its 9 day EMA signal line. Among other technical observation MACD on the daily charts has come into buy mode and prices are also trading above its parabolic SAR. Heiken candlestick suggests beginning of fresh leg of rally on the weekly charts. Our take: In the fate of these technical observations we expect the stock to continue its uptrend from here and hence any declines could be utilized for fresh long accumulation. We expect the stock to initially rise till 1423 and weekly close above that to toward the 1480. 8
TATACHEM CHEMICALS 628.30 BUY 600 575 685 705 21 day EMA 622 612 640 50 day EMA 614 600 666 200 day EMA 549 580 700 TATACHEM has retraced close 5% during the last month on the back of minor profit taking from higher levels. However strong buying volumes along the support levels have been observed in the stock. The stock has been making cycles of higher highs and higher lows on daily, weekly and monthly charts suggesting overall positivity. Deliverable volumes during the last month were also witnessed to be good, in spite of minor profit taking from lifetime high levels. The stock now looks well set to inch higher once it crosses the Rs.645 mark. This move above the said level can trigger a fresh round of buying in the counter and take the stock towards the mentioned target levels. As far as Technical indicators are concerned, the ADX which indicates the strength of the trend is clearly indicating overall strength as it is trading at 38.85, and till such time the ADX manages to hold above the 20 mark, positivity in the counter is likely to continue. On the other hand the 14 week RSI average which is placed a 65.56 suggests that there is still upside room for the stock to move higher. TATACHEM is also trading above its 21 day EMA at Rs.621.76 and also above the 50 day EMA at Rs.613.54 suggesting the strong grip of the bulls in this counter. The 200 day EMA for the stock is placed at Rs.548.98. Therefore we recommend positional traders to go long in the stock at levels around Rs.626, average the stock in case of declines at levels around Rs.600 with a stop loss placed below Rs.575, for potential upside targets of Rs.685-705 over the next one month. Our take: We expect the stock to resume its strong uptrend from current levels and recommend that any declines could be utilized for fresh long accumulation and trade bullish for the mentioned targets within the stipulated time frame. 9
TATACOMM TELECOM 730.35 BUY 700 675 790 820 21 day EMA 685 700 750 50 day EMA 695 685 785 200 day EMA 644 675 800 TATACOMM has been in a secular uptrend since the stock staged a break out above 505-510 levels on the weekly chart, maintaining its higher highs and higher lows ever since on the same. A trend line connecting the low of 325 and 430 when extended, clearly depicts the stock price has recently taken support on the same and moved back above the 700-710 that was acting as a resistance in the recent past. Fibonacci retracements drawn from the high of 782.50 to the low of 625.25 on the weekly chart suggests the stock price has moved beyond 61.8% mark that is represented by the 720-722 levels suggesting the correction in the stock is most likely over. This makes current levels attractive to enter from a short term perspective as the stock looks poised to continue its positive trend. On the daily chart, the price has taken support at the 200 day moving average and breached on the higher side of a W pattern the immediate target of which comes to 745-750. Retesting the 50 day moving average on the same chart the stock is comfortably placed well above all its major averages re iterating the bullish view for the short term. On the indicator front, the weekly RSI has formed a bullish crossover indicating the underlying strength in the counter that adds to the above technical parameters. An increase in volumes last week along with this week s figure looking to surpass the previous, re iterates our positive stance on the stock. Our take: Going forward, with current technical set up of the stock, we expect the positive run to continue in the counter which could lead it to new highs from a short term perspective 10
TATAMOTORS AUTO 476.15 BUY 455 438 515 533 21 day EMA 458 462 488 50 day EMA 458 448 515 200 day EMA 470 439 525 TATAMOTORS has ended the month of May with gains of nearly 4%. On daily chart, the stock has given break out from a "DESCENDING CHANNEL PATTERN" and retested the said pattern on low volumes. Currently the stock is in uptrend and trading above its 21/50/100/200 DEMA levels on the daily charts which indicating inherent strength in the counter. On the Bollinger band (20,2)set up on daily chart the price is moving northwards after touching the upper band and the band is expanding indicating positive momentum in the counter to continue which supports our bullish view on the stock. Even on weekly chart is also rising and the stock has closed above its mean and started to move higher towards its upper band. Among the indicators, the 14-Period RSI is pointing northwards where the RSI has given the positive crossover with 9 Period signal line on daily and weekly charts indicating the strength in the counter. The Parabolic SAR on daily charts is comfortably trading below the price which reflects the buy in the counter will remain intact in short 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 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 515 levels and any correction towards 455 can be utilized to average the stock keeping stop loss at 438 levels on end of the day basis. 11
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