Gladiator Stocks Scrip IDirectCode I-Direct Action Target Stoploss Cummins India CUMIND Buy in the range of 1060-1080 1250.00 970.00 Time Frame: 6 Months Research Analysts Dharmesh Shah dharmesh.shah@icicisecurities.com Pabitro Mukherjee pabitro.mukherjee@icicisecurities.com Nitin Kunte, CMT nitin.kunte@icicisecurities.com com Vinayak Parmar vinayak.parmar@icicisecurities.com com Dipesh Dagha dipesh.dagha@icicisecurities.com May 3, 2017
Cummins India (CUMIND): Bullish double bottom breakout... CMP: 1070.00 00 Buying Range: 1060-10801080 Target: 1250.0000 Stop loss: 970.00 00 Upside: 17% Stock Data 52 Week High / Low 1096.80/746.15 50 days EMA 939 Technical View Cummins India is a leading manufacturer of diesel and natural gas engines, generator sets and related services. The company operates through two segments: engines and lubes. The share price of Cummins India is emerging out of its major two year consolidation phase. The prolonged consolidation has the underpinning characteristics of a secondary 200 days EMA 887 correction within the larger uptrend. The sharpupmovein last five months has seen the stock move above its 52 Week EMA 893 previous intermediate peak of 947. In the process, it has also started forming higher highs and higher lows on the Face Value ( ) 2 weekly scale signalling a major reversal of trend and therefore, provides a good investment opportunity for medium Market Capitallisation ( Cr.) 29605 term investors *Recommendation given on i-click to gain on May 03, Bullish Double bottom reversal pattern at key value area 2017 at 11:04 hrs The price decline from August 2015 all time peak of 1248 found its feet precisely at the key value area placed around 750 levels during May 2016. The stock witnessed a steady pullback from the value area and formed an intermediate Stock price vs. BSE 100 1,100 1,050 1,000 950 900 850 800 750 700 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 Cummins BSE100 10,000 9,500 9,000 8,500 8,000 7,500 7,000 Price performance in last five years 70% 20% -30% 48% -8% 82% 18% -21% 2012 2013 2014 2015 2016 Year Source: Bloomberg, BSE, ICICIdirect.com Research peak at 947 levels during September 2016. The stock reacted lower along with the market during November 2016 and formed a Double bottom around 750 highlighting presence of strong demand at the key value area. The subsequent up move has seen the stock register a resolute breakout above the bullish double bottom reversal pattern during April 2017 signalling end of the corrective phase and resumption of primary up trend. The key support near 750 levels is based on a confluence of following technical parameters : Value of the long term rising 200-week EMA was then placed around 755 region 61.8% Fibonacci retracement of the 2014-2015 2015 up move 430-1248 was also placed around 750 region After registering a resolute breakout from the double bottom above 947, the stock has consolidated above the breakout area over last two weeks and formed a higher base around 960-970, which will act as major support going forward Time wise, the stock has already completed 20 months under secondary corrective phase against preceding 19 month rally, while, price wise the it has retraced about 61.8% of the preceding rise. We believe extended time wise consolidation and limited price wise correction highlights the robust price structure and augurs well for the stock Momentum oscillator confirms inherent strength in trend... Among oscillators, the weekly 14 period s RSI is in uptrend forming higher high and is seen taking support at its nine period s average highlighting underlying strength in the trend from a medium term perspective. Conclusion Based on the aforementioned technical observations, we believe the stock has concluded a healthy corrective phase. The recent break out from bullish Double Bottom pattern provides the impetus for a sustained up move towards targett of 1250 levelsl overthe medium term as it is the 123.6% Fibonaccii extension of the previous major up move from 750 to 1003 as projected from recent trough of 934 which also coincides with the previous all time high placed around 1248 levels 2
Cummins India : Weekly Bar Chart Breakout from bullish double bottom pattern signals resumption of upward momentum 123.6% extension of previous up move @ 1250 1248 947 934 750 430 Base of the double bottom is placed at long term rising 200 week EMA and 61.8% retracement of previous major rally from 430 to 1248 Weekly 14 period s RSI is in up trend forming higher high and is seen taking support at its nine period s average Source: Bloomberg, ICICIdirect.com Research 3
Strategy Follow up Open Recommendations: Date Scrip Name Rec Price Target Stoploss CMP Return till date (%) 20-Mar-17 IDBI 75 98 66 80 6.7% 23-Mar-17 GMDC 121 154 102 124 2.5% 11-Apr-17 JK Lakshmi 455 542 405 469 3.1% 11-Apr-17 Heidelberg Cement 126 150 109.5 133 5.6% 11-Apr-17 Ashoka Buidcon 208 258 184 200-3.8% 18-Apr-17 EIH Ltd 127 152 112 133 4.7% 21-Apr-17 Cera Sanitaryware 2934 3680 2520 3040 3.6% 21-Apr-17 VST Tillers 1880 2285 1660 2002 6.5% 21-Apr-17 Monsanto 2570 3060 2280 2543-1.1% 27-Apr-17 Nestle India 6520 7750 5875 6716 3.0% 27-Apr-17 Emami 1035 1250 910 1068 3.2% Summary Performance - Recommendations till date Open Recommendations 11 Total Recommendations 151 Yield on Positive recommendations 20.0% Closed Recommendations 140 Yield on Negative recommendations -8.0% Positive Recommendations 105 Strike Rate 75% 4
Notes It is recommended to enter in a staggered manner within the prescribed range provided in the report Once the recommendation is executed, it is advisable to keep strict stop loss as provided in the report on closing basis. The recommendations are valid for six months and in case we intend to carry forward the position, it will be communicated through separate mail. Trading portfolio allocation It is recommended to spread out the trading corpus in a proportionate manner between the various technical research products Please avoid allocating the entire e trading corpus to a single stock or a single product segment Within each product segment it is advisable to allocate equal amount to each recommendation For example: The Daily Dil Calls Cll product carries 3 to 4 intraday recommendations. It is advisable to allocate equal amount to each recommendation 5
Recommended product wise trading portfolio allocation Product Allocations Product wise Max allocation in allocation 1 Stock Number of Calls Return Objective Frontline Stocks Mid Cap Stocks Duration Daily Calls 8% 2-3% 3-4 Stocks 0.5-1% 2-3% Intraday Stocks on the Move 6% 3-5% 7-10 Per Months 7-10% 10-15% 3 Months Weekly Calls 8% 3-5% 1-2 Stocks 5-7% 7-10% 1 Week Weekly Technicals 8% 3-5% 1-2 Stocks 5-7% 7-10% 1 Week Monthly Call 15% 5% 2-3 Stocks 7-10% 10-15% 1 Month Monthly Technical 15% 2-4% 5-8 Stocks 7-10% 10-15% 1 Month Techno Funda 15% 5-10% 1-2 Stocks 10% and above 15% and above 6 Months Gladiator Stocks 15% 5-10% 1-2 Stocks 15% and above 20% and above 6 Months Cash 10% - 100% 6
Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC Andheri (East) Mumbai 400 093 research@icicidirect.com 7
Disclaimer ANALYST CERTIFICATION We /I, Dharmesh Shah, Dipesh Dagha, Nitin Kunte, Pabitro Mukherjee, Vinayak Parmar Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a SEBI registered Research Analyst with SEBI Registration Number INH000000990.ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. ( associates ), the details in respect of which are available on www.icicibank.com ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining i i a financiali interest in the securities ii or derivatives i of any companies that the analysts cover. The information and opinions in this section have been prepared by ICICI Securities and are subject to change without any notice. 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 ICICI Securities. While we would endeavour to update the information herein on reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non- rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances. The research recommendations are based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. These research recommendations 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. ICICI Securities will not treat recipients as customers by virtue of their receiving these recommendations. Nothing in this section constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed herein may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of these recommendations. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. 8
Disclaimer ICICI Securities or its associates 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. ICICI Securities or its associates might have received ed any compensation from the companies mentioned ed hereinei during the period preceding twelve months from the date of these recommendations for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction. ICICI Securities or its associates might have received any compensation forproductsorservicesotherthaninvestmentbankingormerchant banking or brokerage services from the companies mentioned herein in the past twelve months. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates 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. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this reports. It is confirmed that Dharmesh Shah, Dipesh Dagha, Nitin Kunte, Pabitro Mukherjee and Vinayak Parmar, Research Analysts giving these recommendations have not received any compensation from the companies mentioned herein in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the company/companies mentioned herein asof the last day of the month preceding the publication i of these research recommendations. Since Associates (ICICI group companies) of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned herein. It is confirmed that Research Analysts do not serve as an officer, director or employee or advisory board member of the companies mentioned herein. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented herein. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned herein. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. This report or recommendations are not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. 9