Author Archives: Kush Ghodasara

Should not miss opportunity on Tata Motors!

Tata Motors has been one of the oldest names listed in Auto sector, but in recent times it has not been in the list of favorites for investors. If you are a long term investor and had invested in Tata motors in the year 2013 then you are at par with your capital or just 10% ROI but at the same time if you had invested in the benchmark index then you might have earned around 70% on your investment. So clearly, investor has lost opportunity returns in being invested in Tata Motors.

But what’s next? Should They Exit???…No! 

After 2016, JLR sales has slowed down comparatively in US and Europe which was hampering the sales growth of Tata Motors. The reason for this being lack of consumer confidence and lower demand for diesel. JLR sales contribute as much as 65% in absolute terms of total sales of the company on its consolidated balance sheet. So JLR sales has a direct impact on Tata Motors fundamental performance. In the last Quarter, sales of JLR have been picking up again steadily on MoM basis in Europe and US. But now the Asian market contributes approx 27% towards its sales. Now is maybe the right time to be positive on JLR sales in coming quarters.

Looking at the Domestic operations, Tata motors continues to hold pioneer position in Commercial Vehicle sales while Passenger vehicle sales are improving. Tata Motor’s Tigor would be the Game Changer this FY because they have come out with Battery version. They have got order from government for around 10,000 cars. Therefore the Domestic operations are expected to pick up this year. 

Now to sum up, the Fundamentals of the company are expected to pick up. So, now let’s have a look at what the charts have to say?

 

Technically the stock has been trading at the lows of 2013 and also it is around 8 years support trend line on weekly charts. Indicators are oversold on the weekly zone and we have seen sharp short covering last week with heavy volumes which was from the support of the downside trending channel. As a long term investor this is the best time to start accumulating the stock on technical parameters. Maybe we have two resistances at 411 and 450 but once they are breached, we are going to have dream run on the stock. On the downside the support is at 300-314 which could act as stop loss for your investments.

P.S. Fundamentals of the stock looks at attractive valuation while technically the stock has parameters which could give fierce reversal supporting to our fundamental turnaround. So the strategy for investors is to accumulate stock at each dip with SL of 300 while TGTS for short term 411 and 450 but for long term we still have a long way to go!!!!

 

Dead Bull Bounce?

Havent heard about a Dead Bull Bounce?….Nor did i ….We always heard about a “Dead Cat Bounce”…But Last two days recovery on Nifty has made me curious for a bounce which is greater than a Dead cat bounce but its not a rally until we breakout on resistance.

Attached graph is weekly graph of Nifty as on the Closing on 27th March. A day is still left to close the graph but we can take a early call as there are many signs of a bounce back. If we look at the candlestick pattern, we have two possibilities tomorrow, either bullish Engulfing (If we close above 10228) or Bullish piercing pattern (if we close above 10106). After last two days of recovery in the market, i feel atleast we are getting a close above 10106 tomorrow which makes a possibility of a reversal strong.

There are many other factors to support the reversal pattern on Candlesticks which are more crucial than such patterns starting from 200 Weeks average support at 10061 on closing basis. We did close below the same last week but as Technical guide says, we need two confirmation minimum to be assure of any breakouts , so in our case tomorrow we are almost closing back above 10061 making last weeks close a false one.

Second factor, is the oversold territory where indicators are revolving as of now. We can expect a sharp short covering and tomorrow might be the day as its March expiry and also the last trading session of current fiscal year. Looking at the option data for we can expect 10000 to be the support for near term.

So how would we know how far can a bounce be ??….

…my Third Factor, Wave theory. Looking at the recent fall in the markets, we have either completed a Minor Wave 4 at 9955 or we have completed Wave A of a Wave 4 correction of a rally from 7825-11200. In either possibility, minimum bounce or rally could be upto the range of 10560-10710. 

So to sum up, we can expect a Dead Bull Bounce rally with the targets of 10560-10710 while Stop loss on downside can be 10061 which is 200 weeks average. Expect some furious short coverings in PSU Banks n Pharma so watch out for stock specific trades too. BUT markets are always unpredictable so hedge your positions with 10000 PUTS of April series. 

See you guys soon! Happy Trading!

 

Disclaimer:

Nifty showing fear for first time in 14 months!

Nifty had been in super trend since the month of Demonetization which gave us a rally from 7900 to almost 11200 in 14 months. Generally market is said to be significantly corrected if we have a breakdown of almost 10% from the recent highs and which we never got in this 14 months rally. But now, last week sell-off has got some fear amongst traders and that nervousness can also be seen on weekly charts of Nifty

 

Attached chart is of Nifty and the periodicity selected was Weekly for my study. During my quick go-through it came into my notice that Nifty is near to 13 Weeks Average support which hasnt breached on Weekly closing basis since last 14 months. Currently that support is at 10550 mark and we almost kicked it off today with the low at 10586 at spot level.

So what Next?

Surely we are trading near to support crucial level but it isnt sure that we breaking down from this levels. On positive side, Nifty has given a minor 4 th Wave correction which might have ended at  todays low and we may see some bounce back to 10900-11000 levels before confirming any medium term reversal. Strongly resisting this rally is the bearish engulfing pattern on weekly charts at recent highs making it more difficult for bulls to take fresh longs. I am sure many mid-cap stocks are looking at attractive valuations which tempt you to buy stocks for short term but crucial remember 10550 on this weeks closing. To support on the short term trades, we even have strong PUTS writing at 10500 until today which would be help for derivative traders.

Conclusion :

Short term trade can be of a pull back on Nifty since we had got a steep fall in recent past. So short term traders can go long on Nifty with tgts of 10790/10840/10960 and stop loss 10520 

Medium term traders could wait for a confirmation of either breaking below 10550 or above 10900 for trend confirmation.

Have a happy trading week guys!

10000 is the new 9000 for 2018?

Markets has clicked a New high yesterday bringing some cheers among-st traders but most importantly it has shown some new sing of rally for Technical Analysts. As we all could witness, Nifty has been in the range of 9500-10000 post GST but since late October the range had rose to 10000-10450 which was finally breached yesterday

During these two quarters of rally, one thing has been clear that 10000 mark was acting as a pivot point around which markets were resisting and later taking support. After yesterdays a pinch of breakout from the box of consolidation, we can now lookout for 11200 mark minimum on upside while other 3 probable targets for 2018 would be 11600/12300/12700. 

That was about upside but would could be the bottom ??????

10000 could be the new 9000 for 2018. 9000 mark was considered to be strong support for 2017 which was neckline breakout of Inverted H&S and the same could be the case with 10000 mark for coming months. Though some might not consider breakout to be a strong one but for me its a confirmation for a new bull run.  Fundamentally too we have seen many companies posting better than expected results which could attract some institutional buying at start of 2018. May be we have expiry next week so we might get some volatility but now 10000 is strong psychology support while 50 day SMA at 10117 could be the stop loss for traders.

So what would be the Strategy now ?

For Investors: Start accumulating Front line stocks on each dip in coming quarter and then hold for 2 years

For Short term traders: Buy Nifty on each dip with tgt of 10680/11200 ….On the downside we have supports of 10290/10117/10000

 

Doji Family is ruling party this week!

Nifty had been in strict profit booking mood and bulls were trying to find out a way to get out of the trap and then Moody’s Re-rating on India came as a surprise on the street! Markets took a U-Turn on such news and we saw a initiation to a new short term rally. 10345 which was a strong resistance level is now acting as a “battle field” for Bulls and bears since last 4 sessions.

Interestingly we have got “4 Consecutive Doji’s” on Nifty daily chart which is signifying a a perfect Demand And Supply scenario. Tomorrow could be an interesting day which could bring out one winner for short term. Applying Elliot Wave on the chart, it seems we are into Wave 5 of the Minor trend which could end around 10600 which was also target activated on Inverted H&S breakout at 9000 making target more feasible. For near term support, 10150 could act as a stop loss for all fresh longs. Even taking support of Derivative setup as we get near to Expiry, 10300 has a strong writing on the PUT side which means now that level is difficult  to close below in next week.

So now as Doji’s are crowded on the chart, tomorrow could be decider day or to say for me it will be a confirmation day for a long calls. Be stock specific on the trades and not on the index. Keep a trailing SL of 10150 for all existing longs and for fresh longs keep 10270 with tgts of 10480/10600 in coming weeks.

You feel enough for Banking Stocks?

Banking stocks are on a Dream run! PSU banks which were neglected by most of the traders gave whooping returns overnight on the news of Bank recapitalization by our Finance minister. After such a quick returns, you would be feeling its enough for Banking Stocks?… “I Believe its just the new beginning

Fundamentally many banking stocks are still reporting higher NPA but i think they are cleaning up its past mistakes. And as we know, market discounts future expectations, which is the reason supporting current rally on bank index. For the short term trend lets catch up with daily charts of Nifty bank where we have seen some breakout from consolidation pattern. As we can notice in the chart, Nifty bank index has moved out of “Rectangular Formation” which was intact since late June’17. During this formation, it has triggered a start of Wave 3 of a smaller degree of trend which has now support at 24800 with minimum tgts of 26000/26320  on the upside. Indicators are also moving with a strong strength for a new high. Now for a quarterly view i feel 24300 is the maximum downside where we have a gap unfilled and 20 day Moving average support.

So view: Hold existing longs on Nifty bank with tgts of 26000/26320 or buy fresh near to 25000 in near future with stop loss of 24300.

Ignition above 440 mark !

Auto sector stocks have been out-performing Nifty index which could be clearly measured from NSE Auto index which has almost given 300% return from 2012 lows against approx 75% return on Nifty index in same period. Stocks such as Eicher, Maruti, Ashok ley and TVS Motor has given tremendous returns. One Stock which should on the list but couldnt secure place due to volatile sales Unit is Tata Motors. So what should a Investor do next if he holds? Or what if a investor wants to invest at current levels? …Lets Look at some factors to answer both questions…

Domestic Sales Trend

Tata Motors is into Passenger Vehicles and Commercial Vehicles segment in India which as a sector has seen a good growth. Company’s share in Commercial vehicles is still a healthy one and its going at steady pace but Passenger vehicles market share was shrinking as they didnt have compatible models to fight against competitors. But recent launches HEXA and NIXON could give a tough fight as they have some JLR technology but at an Indian Price. Another game changer could be Tata Tiago’s EV version which is a move to drive Governments goal of developing Electric Vehicle market by 2030. As per my knowledge Tata Tiago could run 150 km at one charge which is compatible with existing models of competitors. Even company has recently won some government orders to supply Electric vehicle which could be helping Domestic sales.

Above graph is Company’s Auto sales number and we could notice that recent past has been in increasing trend which is almost at 8 years high. So company is doing fairly good at Domestic sales level and has favoring conditions to grow in coming quarters.

JLR Sales

JLR brand gets almost 80% of Company’s revenue in absolute terms and profits are directly related to this segment’s performance. Brand had many hiccups in the sales performance globally which is the reason why company hasnt been performing well till now. Sales in Europe and US had dipped in last 3 quarters which is now expected to rise after ECB is continuing with QE and US may come with big tax cuts in November.

Though JLR sales is down almost 40% from 2016 highs but still it is on increasing trend since last 8 years. A small positive jump on Auto sales and stock is expected to cover up all lost ground.

Now lets look at Technical Charts

Tata Motors has been in range bound movement since last 2 months which is why i have gone to weekly chart to catch up with some long term support. Interestingly i found that stock has just taken support at 9 year Support trend line which means its at the best time and price to accumulate stock for strong reversal. As you would notice upside trending WHITE support line which is currently around 390 levels which could be taken as a Stop loss. Considering  Weekly RSI indicator and MACD indicator , they have given a positive crossover signaling a buy on the stock. But to confirm a positive reversal, safe investors can watch for 440 level on upside which is a breakout from a currently down trending BLUE channel.

To sum up, Tata Motors has been under-performing ,its peers and index ,as Sales number for Company had been sub-dued. Now as we can notice sales has been reversing since quite some time which is yet not discounted in the Stock price so we are technically looking for a entry in the stock. Reading the charts has revealed that a move above 440 could ignite a new long term rally on the stock. So strategy for investors would be accumulating at each dip with sl of 385 while short term traders can buy above 440 for the medium term tgts of 560/600. 

Have a safe drive and read disclaimer before driving stock on our recommendation.

Hence confirmed!

Nifty had been volatile in the strict range since few months between 9700-10150 but in such course it was giving a perfect corrective Wave which was proved this week. In my last post we did study two cases where we expected either sharp downside or rally, and now our fortune is decided.

So now as you can notice in the chart, Nifty had two possibilities of going to either 9400 or 10700 which all depended on whether it is resisting near to 10060 or not! Yesterdays close above 10060 has given a fresh breakout on weekly charts and now we can be rest assured that we are positional inching to new limits for the skyline. Though the rally wont be easily as it was in the start of the year but with some hiccups on the way.

Technically speaking, lastly marked 9700 was an end to a corrective pattern and new Motive Wave has been initiated since then. So now technical support range for long trade would be in the range of 9700-9800 where 9860 could be a stop loss for all long trades as of now. Indicators are though overbought in weekly charts but have got enough correction in recent past to make a new strong move. Wave count makes a recent small tgt of 10700 with sl at 9860 on Nifty weekly chart. Stop loss at 9860 gets more relevance as its even 20 Weekly SMA which has acted as significant support since the start of this calendar year rally.

Strategy for Traders: Buy Nifty on each dip with tgts of 10700 and Stop loss 9860

Strategy for Investors: Park your liquidity in Pharma stocks and Pvt sector stocks for long term investment in next 2 weeks and wait for fruit to ripe in two years. For stock recommendation look out for our app!

 

GST Simplified to fuel next rally or its a Start of Wave C to 9400?

Nifty has completed short covering which i mentioned in my last post and targets of 9980 were achieved on Friday. But now what next?

Technically speaking we should now trade after getting closer to 10050-10060…But can GST Simplified announcement fuel the rally ??…Lets look at the chart

May be you might be confused looking at the charts, but let me explain you in simple words. When we last crossed 9000 in March, we gave a breakout to Inverse H&S pattern which gave a target of 10600-10800 for a long term bet which is yet active which suggest that we are surely in a long term bull run and we should get there once before crossing down 9000 anytime in future. Now when we consider Wave Theory to predict further trend we are getting two probabilities …First is that a dip to 9700 was a Corrective WAVE A of larger trend , which means recent short covering is WAVE B which can resist in the range of 9980-10060 and resume slide down to 9400. Second is that a dip to 9700 was the end of Corrective Wave 4 of a motive wave which means we are into Wave 5 of the larger trend which could get upto 10700 which is coinciding near to Inverted H&S. But remember BOTH POSSIBILITIES HAVE EQUAL CHANCES!

Now looking at the Derivative open interest , currently we are having a resistance at 10000 which is making us little bit biased on the short selling in next week but for the bulls we got a GST Simplified Announcement post market hours on Friday which could break that resistance on Monday opening.  Now Talking about Moving averages , we have closed above 20 DSMA 9965 which was acting as a strong resistance on daily chart and on weekly chart we have taken strong support on 20 weeks Average which is acting as support since start of the year.

So to recommend a strategy to my readers, i would suggest going stock specific longs on monday in sectors such as PSU Banks and Pharma which are looking to outperform on charts in coming weeks. Also Earning season kick starts next week so that could be in focus. On the otherside for index trading, i would recommend not to trade this 100 points  (9980-10080) as it could be quite volatile. To get a confirmed trade, we need to close above 10060 for longs and close below 9910 before crossing 10000 next week for shorts. So its better to avoid index trading and rather stick to stock specific trading.

Happy Weekend Guys and will keep you posted as soon as we get some clear trade on Index!

Markets in confused state of Mind!

Nifty Saw a Quick fall from 10178-9813 in just 6 sessions which was a night mare to most of the traders! But i am sure whosoever ready my blog on 19th Sept last week , when Nifty closed at 10148, they would have made good money in this fall. In my last post recommended to liquidate Long positions and Even go short for risky traders for the target of 9950 which was achieved yesterday.

So What next now??..Lets study some signs on Nifty Weekly Time frame

 Last week fall has given a birth to Bearish reversal pattern ” Bearish Engulfing” right on the top of the chart. Generally such patterns are major sign of reversal for a medium term trend. To confirm bearish reversal, we require a low lower than the pattern in subsequent week and we have got that in first two days of the week itself. Now this pattern is said to be valid unless its high is breached which in our case is 10178!  So from First instance it looks that we  have turned around for a fall now…

Take Second instance , “Negative Divergence” of Nifty to it RSI! As marked with the Yellow line, while Nifty pinched a New high last week, simultaneously failed to make a new high on RSi which in simple terms denote that we were not able to close anywhere near to new high last week. Just sign is of losing rally momentum. So now this surely compliments Bearish Engulfing as stated above.

But now lets take a look at some other side of picture which is making market sentiments some confusing…..

Now if consider Wave theory, the recent top has two probability, 1) Wave 5th Truncated which supports downside momentum or 2). Wave C of a corrective pattern which can end this week. 20 Weeks average which also ought to be 100 days Average level is exactly at same level of 9780 which makes it a strong support zone. Even a quick fall has resulted in Daily indicators entering oversold zone . So this all factors are making some confusion at the Street..

So What should be next strategy ???

Looking at derivative Setup, traders are indicating range of 9700-10000 for a while. So difficult to take a one way call on either side completely. So as a risky trader we recommend to buy Nifty with Stop loss of 9780 and Sell when its near to 9980! Buy for safe traders would recommend to avoid trading unless the range 9700-10000 is breached convincingly with volumes.

To conclude my view in a line, “Short term view is of Strong short covering but for medium term tables have termed bearish for which i am awaiting confirmation soon”……

Do hedge your positions and i will see you guys soon!