Infosys which has been pillar of many large investor portfolio since almost 2 decades, has taken a hit in last two sessions. This hit could be the Start of the End of Infosys era! On 13th April, in my post “Can INFY loose its decade old rally?” , i already warned and initiated SELL call with tgts of 920, 840 and 790 of which we have almost reached 2nd destination. Stock had been in long term consolidation of 3 years long in the range of 900-1100 and was finding out a reason to move out of the range on either side…And finally, we got…….
Resignation of Mr. Sikka has been the reason of breakout from the consolidation pattern that too on downside. With such an instance it has also given two other bearish confirmation on monthly charts which means we need to be cautious for the stock in long term portfolio.
Firstly, Stock has breached 10 year old channel on Monthly chart which is a strong sign of trend reversal as the selling has been pretty much with higher volumes than average volume. BUT still confirmation would be done if it closes below 880 this expiry.
Secondly, we have got a probable H&S breakout on monthly chart with neckline at 880 level which is exactly at the same level where we got channel breakout.
Now technically on charts, 880 is crucial level to watch for next two weeks but on other side as of now buy back price is set 1150 levels which might be revised. So when technical and fundamental is not going in same direction, we should avoid any new position unless we have clear picture of future. As a trader i would recommend shorts and as investors i am still intact with my targets of 840 and 790 which now trailing SL at 950!
Read disclaimer on kushghodasara.com
Tata Steel has shown some fantastic momentum in recent years and now investors who have missed the move are waiting for a correction or feels the stock is overvalued. But lets talk about the stock technically again! In my last post on Tata Steel at “Still avoiding Metal Stocks? Not Tata Steel Now!! i did recommend to go long on the stock at 447 but still Tata still is yet to start a Rally! My view is purely for long term investors as what i am gonna post today is on Monthly charts of Tata Steel from which patterns are most favorable to investors with the view of minimum 6 months of holding period.
So the chart attached is clearly showing positive momentum for the stock since almost 2015 but still the actual technical rally is to kick-off. The Blue lines are showing the Bullish Formation : ” Double Bottom “. The pattern has a neckline at 575 which means stock would give a buy over the close at 575 which is termed as breakout in technical terms. If we try to channel out its move from 2015, we get a perfect parallel line movement and it seems to have equal breakout level on upside at 575 as double bottom making July month crucial for the stock and new investors. Ofcourse indicators are into overbought zone but still it has potential to move much ahead. The dotted blue line from the neck line gives us pattern target of 900-940 which is almost 80% upside from the current levels and for those who followed my last post on the stock has 100% upside.
On the risk side, stock has support of 20 month avg at 400 which is also support drawn by connecting 2007-08 highs. MACD which i consider to be the tool of long term positional traders has just crossed 0 mark on monthly chart which supports my view of Double Bottom breakout pretty soon.
So strategy for Long term investors.” Buy Tata steel at 575 tgts 900-940 sl: 400″ Rd disclaimer before investing
BHEL has been a outperform in last 3 months with almost 50% return to investor but now its time for some profit booking. Stock has manage to close below 20 day Average after 3 months and even the indicators have given bearish crossover to confirm some profit booking ahead. Crucial support of 165 has also been breached with heavy volumes on Thursday. So now one can short BHEL from current levels for almost 8% gain in quick time
Strategy for Traders : Sell BHEL tgt 150 sl 168 and to Hedge buy Nifty tgt 9280 sl 9050
Reliance Industries has been one of the most under-performing stock in Index since the 2008 Crisis but finally we are hoping for a turnaround i…You feel the recent rally from 1000-1335 is enough for now?….Naaaa..The Game has just begun today .
Reliance industries is not just technically undervalued but also fundamentally. Lets have a look at Fundamental snapshot
Though am not a best Fundamental analyst but what i can understand from above figures is that sales have increase 119% with profit rising 40% which are the most crucial numbers to arrive at market price but still the stock price has just risen 12% during this last 9 years. The best part what i understand is that indicators which affect PAT, which is GRM, Crude prices and USd-INR, all have been negative but still PAT was sufficient to grow at health rate. Now when we expect Crude prices to rise globally with Rupee getting strong, am sure GRM would increase PAT for the company from Current levels. This is surely gonna help to shoot up Reliance’s Oil business.
BUT the cherry on the top would be Reliance Jio. As you all could notice in Businesses row, company has added so many businesses in last 9 years and from tomorrow its biggest investment Reliance Jio would start giving fruits. Almost all fixed investment and expenses on Reliance Jio has been discounted with 0 revenue. But from tomorrow revenue of Jio would be start flowing in which would raise bars of PAT in next quarter. So you must have Reliance on Jio.
Now coming to some Technical know-hows, today Reliance has managed to close above 1320 after 9 years where we last saw close at 1320 on 21st May 2008. This was the reason why we took comparison of 2008-2017 in the above table.
As you all could notice in the chart above, Reliance has given a Flag pattern breakout today with high delivery volume with highest closing in last 9 years. Flag pattern breakout almost gives another lap of equally fast rally as we saw just before profit booking in march. Which means we are moving for 1550 on stock within next 3-5 weeks. So now the stock is going to be purely a out-performer even at this levels.
So strategy would purely be BUY for tgt 1550 sl: 1200 for traders while investors can accumulate for nexr 3 months until Jio revenue gets reflected on balance sheet. Stock could surely be a multi-bagger for long term investment.
Metal Stocks have been under performers since last 8 years, from 2008-2016 but not now!!! In a broader sense we may say that 8 year bear cycle of commodity prices have ended last year at fundamental level. We have seen global metal prices bouncing almost 20% from the lows in 2016 which has resulted in turned in many global companies like Rio Tinto and BHP. And now metal price hike effect would start appearing on indian metal company’s Balance sheet. But before fundamental guys say’s “BUY”, technical charts have already given a breakout…
Above chart is of TATA STEEL monthly time frame, where we could notice that stock has just notched out of symmetric triangle almost after being intact for 17 years!! This clearly signs of a turnaround for long term. On the upside as a yearly investor, u could see 600 mark but above that it would again be a double bottom breakout which activate target of 950..So ball is in your court to decide what you wanna do with the stock
Strategy for Investors:
Buy CMP: tgts 600/950 SL: 350
Now coming for short term traders, they too have a great trade ahead……………..
So now lets have a look at Daily chart above which says a double bottom breakout with a breakout gap. Even the volumes at the breakout is strong…Yesterday which was a breakout on daily chart is the same price for breakout on Monthly chart as i stated above..So 437 mark is strong technical support now. Though it doesnt mean we can have a profit booking but we may be sure that each dip now is a buy.
Strategy for Traders: Buy with tgts of 500 sl: 412
Happy Profit mining to all!!
Banking Sector was on a dream run since February and out-performer amongst them were PSU Banks. State Bank of India (SBIN) which has weight age of 9.48% on Nifty Bank had always be a lender of last resorts for longs in this dream run since February but now it may not be the last resort for Bulls as its about to give a bearish reversal signal confirmation on daily charts and the pattern is one of the most successful patterns on Indian charts i.e., Head and Shoulder pattern! As marked in attached graph, we could see a that we have closed today exactly near to Neckline around 251.50 and sell-off could be triggered tomorrow below the line. Now let me explain you pattern a little bit:
Volume plays crucial role on Head shoulder patterns during falling sessions.
- First, Left shoulder downfall (marked light blue) has diminishing volumes then the rise on left shoulder. Traders thought process is such that this is just a profit booking of previous rally so we dont see major volumes during downfall.
- Secondly, Head has rising volumes on the rise but the top followed by a profit booking has highest volumes and we could notice that in the box markets Yellow in the graph.
- Third and most import part of the patter is Right shoulder and it has volume more than the recent averages specially on the breakout days. So we consider previous two sessions excluding today, we have got volumes more than last 5 days Average as marked by green line.
What should we look out tomorrow for confirmation of reversal?
- A Close below the neckline which is approximately at 251.50
- If Volume is greater than 13.1 Mln shares which is 5 day average
- a Gap down with above two points would give a better confirmation
So the pattern seems to be intact until now but nothing can be said until tomorrow’s close but smart traders should pick up the call before the close tomorrow as i mentioned above.
Now if we take some other factors in consideration then 250 PE is also strong support indicated by Options for this expiry which is coinciding with Neckline level. This would surely trigger strong long unwinding below 250 mark tomorrow,. Secondly, even if u look at Nifty bank stocks, SBI is the only stock of top 5 weight-age which hasnt triggered sell-off yet in last 3 sessions. So after, Yes Bank, Indusind Bank, Axis bank, ICICIBANk, can it be SBI? …We would get the answer tomorrow..
Sell SBI tomorrow below 251.50 with stop loss of 261 and target of 227 on positional basis…Safe traders can wait a day close confirmation….Cheers!!
Media and Entertainment industry has been hot favorite since late 2014 and we have seen all stocks from the segment emerging out as multi-bagger. One of the stock which had initiated rally in sector was Eros international which moved from almost 140-640 in just a years time who was joined by other stocks like PVR and Inox Leisure. At current date PVR is doing the best followed by Inox Leisure and Eros is last because of a strict Sell-off late last year on accounting scandal allegations. But now i am getting a strong feeling of entering Eros again for 3x movement minimum from here. There are few factors which are giving me strong bias on my view. To start with most crucial point, its about accounting fiasco allegation which its US holding company was facing has been put down after respective appointed committee cleared them after investigation. So fundamentally is surely convincing to investors and analysts who has lost hope in management. Few reports even say that corrected practices would be more profitable to indian counterpart in terms of Revenue per user from ErosNow app. Secondly this Calendar year they are entering almost 4 new India regional movie segments which could add some large portion to Gross sales. Concluding fundamentally, they have almost 65 releases this year in 5 different languages which just 2x their sales from last financial year if everything goes as planned
Coming to technicals, I just spotted most dependable reversal pattern on weekly charts i.e., Inverted H&S. Though we have just kissed Neckline this week, but there are all chances of getting a breakout over the same next week. Weekly indicators are oversold and have just turned bullish by having internal crossovers to their respective averages. Thirdly, as marked on bottom of the charts, volumes have been rising in last three weeks supporting upside price movement. Fourthly, as circled we had got a Morning star pattern before 2 weeks and its confirmed with two weeks close above the same. 278 is resistance as marked with red line as it was the levels where most volume in a week while falling had taken place which could mean it could act as a supply zone. So now all factors is suggesting a sure Buy for long term but medium term trade could be taken on Technical breakout next week.
Strategy for medium traders: Buy above 219 with targets 278/349 sl: 172
Its often difficult to find a perfect pattern on stock charts for a trading view but today i just noticed something which is just like getting ‘Double scoop of icecream’ in scorching heat i.e., Double Inverted H&S on same stock and on same time frame but with Higher targets on Tata Chemicals. Though i am late in intimating you guys of ‘light blue inverted H&S’ but still we can trade for its target combined with larger ‘Pink inverted H&S’ which has been confirmed today with volumes. Looking at indicators on daily charts we are in overbought zone bought they have given internal positive crossover giving confidence for achieving atleast inverted H&S target in near term which could be tomorrow if they post good numbers. So trading strategy for short term traders is going long on Tata Chem tomorrow at first trade with tgts of 458/530 and stop loss at 390.
As it is said that patience’s pays off so has my trading view on Spice Jet. On 8th April 2016 in my post (Link:Spice up your profits with Spice Jet) i recommended trading on a ‘inverted H&S’ pattern on Spicejet which was trading around 71 and my target was 80 which has been achieved safely. In almost 40 days we got 12.5% return on simple patterns, so have patience and have faith on simple patterns. Will surely give you more such recommendations as i get noticed. Please find attached graph of the stock which clearly marks out the pattern and target achieved.
Equity charts are representations of trade price of a particular stock and Trade price are arrived after psychological decision of a investor. So in short a psychology of investor can be seen on the charts and its always very much difficult to come out a depression! One of the best example of such psychology was seen on MotherSon Sumi Systems chart were after Volkswagen scandal stock saw some strong sell-off and investors, traders and even speculators were avoiding this counter which was the sign of complete “Depression”. But finally after some consolidation now it seems investors are getting back some confidence on the stocks and even Sales in Europe and America are picking up which gives some future valuations on stock a upbeat and weekly charts have also shown a strong reversal pattern to support a view for a rally. As marked by white dashed line we have got a Inverted H&S on the weekly chart with a Neckline at 270 which has been breached and confirmed by a close last week. On the upside we are getting vertical target of 337 which is equal to the distance from the head to neckline. Though their aint any specific rule for stop loss but in this case i would prefer stop loss as right shoulder which is approx 240. I am sure someone would question that we need one more confirmation close for the pattern but looking at the indicators which have given crossover confirmation , i would surely recommend to take a risk bit early. So medium term traders just follow levels mentioned in the post while long term investors just accumulate upto 325!