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    Karvys specialreports 2013070191617 Karvys specialreports 2013070191617 Document Transcript

    • 1 Research Desk –Retail Broking India ValueMax July 01, 2013 Stock Sector CMP Action Average SL Tgt 1 Tgt 2 Bajaj Auto Automobiles 1924 Buy 1850 1790 2050 2120 Bharti Airtel Telecom 291.75 Buy 277 266 305 324 Cipla Pharma 391.95 Buy 378 368 408 415 Divis Lab Pharma 991.1 Buy 950 920 1060 1100 HCL Tech Software 776 Buy 750 730 805 830 HDFC Bank Banking 669.5 Buy 640 620 710 725 Hindalco Metals 99.8 Buy 93 89 108 113 ONGC Oil & Gas 331.1 Buy 317 302 352 365 Reliance Capital Financial Services 336.85 Buy 316 305 358 375 Zee Ltd Media 236.05 Buy 220 210 250 260 CMP: Current Market Price; SL: Stop Loss; Tgt: Target Note: All charts are sourced from Spider Software. ValueMax Monthly Investment Ideas ValueMax helps clients to take a long stance on stocks from the BSE-100 universe. Comprising monthly technical investment ideas, ValueMax will have up to 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 GotX and 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 IRIS & Karvy online websites. Book profit/exit messages will be communicated during the LIVE market on GotX (trading terminal) under the head ValueMax. Please find the ValueMax investment ideas for July 2013.
    • 2 ValueMax Stock Sector CMP Action Average SL Tgt 1 Tgt 2 Bajaj Auto Automobiles 1924 Buy 1850 1790 2050 2120 Key levels Moving averages Support Resistance 21 day EMA 1811.90 1885 2090 50 day EMA 1816.71 1830 2120 200 day EMA 1833.78 1790 2150  Bank Nifty is forming a double bottom formation on weekly charts withneckline placed at 10000 levels supported with a positive divergence with 14-week RSI and Stochastic line, and any positive closing above 10000 levels would guide the index towards the upper band area placed around 11000 levels.  On the daily charts, the index is struggling around its 50-day EMA levels and a failure to take-off the same would trigger a slide towards its immediate support placed at its 8 & 21-day EMA (9400 lev Our take: The stock likely to continue it’s out performance in the near term; the upward momentum is likely to push the stock towards its resistance of 2050-2120 levels. Investors are advised to strictly adhere to the stop loss (closing basis) and target levels mentioned in the above table. .  Bajaj Auto has outperformed the broader market and auto sector last month. The stock ended 5.68% up last month as against its counterpart Hero Motors which lost over 4% during the last month. Bajaj Auto saw a sharp mover in the last week, June on back of strong volume despite the negative news of strike in one of its plant.  On daily charts, the stock has given a breakout to the cluster of moving averages placed between 1811-1833 levels, and managed to close above all its short and medium term moving averages. These indicate confidence amongst the market participants and suggest a buying opportunity at current levels.  On weekly chart the stock has given a break out of downward sloping trend line drawn from the all time high of January 2013. Among technical indicators, the 14-day RSI line and Stochastic has given a fresh buy trigger, and MACD line is above the central line, indicating bull to take charge over the counter.  The stock also saw value buying after the rupee declined to record low of 60.75 levels against the dollar last month. Bajaj Auto gets close to 1/3 rd of the revenue from the export markets.
    • 3 ValueMax Key levels Moving averages Support Resistance 21 day EMA 292.12 282 303 50 day EMA 298.42 274 314 200 day EMA 305.61 268 328  Bank Nifty is forming a double bottom formation on weekly charts withneckline placed at 10000 levels supported with a positive divergence with 14-week RSI and Stochastic line, and any positive closing above 10000 levels would guide the index towards the upper band area placed around 11000 levels.  On the daily charts, the index is struggling around its 50-day EMA levels and a failure to take-off the same would trigger a slide towards its immediate support placed at its 8 & 21-day EMA (9400 lev Stock Sector CMP Action Average SL Tgt 1 Tgt 2 Bharti Airtel Telecom 291.75 Buy 277 266 305 324 Our take: The stock is likely to stay bullish as long as it holds above the 270 levels. Sustenance above 200-EMA would support the positive outlook. Investors are advised to strictly adhere to the stop loss (closing basis) and target levels mentioned in the above table.  Bharti Airtel has been trading in the broad range of 270-330 for the last six months. It has bounced back strongly from its recent lows of sub-280 levels. The stock has underperformed its counterpart RCom and Idea significantly in the last couple of months. Also, it has hangover of the huge dollar debt on its balance sheet. We expect the stock has factored into much of its negatives and would see the catch up rally in the near future.  On the daily charts, the stock is trading close to its short term moving averages. The strong hands are accumulating the stock at the lower end of the trading band indicated by expansion of volumes. However, the stock faces resistance around the 310 levels in the form of 200-EMA, above which a strong move towards 330 levels can be seen in the short span of time.  Among indicators, 14-days RSI has given a buy signal that would help the stock to continue its momentum on the upside. Hence, it is advisable to accumulate on dips below 280.  The increase in the tariff price and increasing volume on the Data front (3G & 4G) would boost the performance the company in near future. Thus, any decline in the stock would attract value buyers adding into their portfolio.
    • 4 ValueMax Stock Sector CMP Action Average SL Tgt 1 Tgt 2 Cipla Pharma 391.95 Buy 378 368 408 415 Key levels Moving averages Support Resistance 21 day EMA 388.88 378 412 50 day EMA 383.6 370 428 200 day EMA 384.09 362 435  Bank Nifty is forming a double bottom formation on weekly charts withneckline placed at 10000 levels supported with a positive divergence with 14-week RSI and Stochastic line, and any positive closing above 10000 levels would guide the index towards the upper band area placed around 11000 levels.  On the daily charts, the index is struggling around its 50-day EMA levels and a failure to take-off the same would trigger a slide towards its immediate support placed at its 8 & 21-day EMA (9400 lev Our take: Cipla being a defensive stock is likely to attract buying because of high uncertainty in the broader markets. Also, the stock could witness fresh investors to chip in on anticipation of strong numbers for the June quarter. We suggest accumulation of the stock for immediate targets of 408 and 415 levels with a stop loss place below 368 levels.  Cipla has outperformed the Nifty in the month of June. The stock has gained 5.78% in that month as against 2.4% loss in Nifty. The stock has seen defensive buying for the last few months after the broader market witnessed huge volatility. However, prior to that the stock has seen sharp sell-off after it disappointed the street with the Q4 results. The stock tanked from the high of 427 levels to 362 levels in less than 2-week time.  The stock has taken support at 360-370 levels and value buying in the stock has pushed it above all its short and long term moving average during the last couple of sessions of June Month. Cipla earns major part of the revenues from the exports and thus, the recent strengthening of the dollar would be visible in the bottom line of the company in the coming quarterly numbers.  On the daily chart the momentum indicators and the oscillators suggest upward movement to continue in the stock in the near future and is likely to head towards its life time highs of 435 levels in the couple of months.  The stock is placed just above its short term moving averages, which will act as strong support and will arrest major downside in near term. Thus, any dips can be utilized for fresh buying into the stock.
    • 5 ValueMax Stock Sector CMP Action Average SL Tgt 1 Tgt 2 Divis Lab Pharma 991.1 Buy 950 920 1060 1100 Key levels Moving averages Support Resistance 21 day EMA 979.37 950 1040 50 day EMA 1001.59 920 1080 200 day EMA 1028.70 880 1120  Bank Nifty is forming a double bottom formation on weekly charts withneckline placed at 10000 levels supported with a positive divergence with 14-week RSI and Stochastic line, and any positive closing above 10000 levels would guide the index towards the upper band area placed around 11000 levels.  On the daily charts, the index is struggling around its 50-day EMA levels and a failure to take-off the same would trigger a slide towards its immediate support placed at its 8 & 21-day EMA (9400 lev Our take: The counter has rebounded from its lows and is expected to continue its upside momentum. The stock can be accumulated on declines. Investors are advised to strictly adhere to the stop loss (closing basis) and target levels mentioned in the above table.  Divis Lab has rebounded after taking support of 925 levels made during the 2 nd week of June. The stock had corrected about 19% from its May high of 1150 levels. The price fall was witnessed by value buying at lower levels by the investors and has seen the stock rise about 7% from the June lows of 925 levels.  On the Weekly charts, the stock has taken support towards the upward sloping trend-line drawn from the lows of April 2009 and is expected to continue its uptrend.  On the daily charts, the stock has given a positive crossover to the 8-day and 21-day EMA and has retraced 23.80% retracement levels placed at 980 levels and is expected to continue it upward momentum towards the 61.80% retracement levels of 1066 levels.  The Bollinger band has witnessed a volatility squeeze in the last few trading sessions and a volatility increase can be expected in the near-term which may take the prices on the higher side in short span.  Among technical indicators, the 14-day RSI has taken multiple supports on the 9-day EMA signal line pointing northwards. The MACD has reached the positive territory trading above the signal line, indicating the potential for the stock to move up in the near-term.
    • 6 ValueMax Stock Sector CMP Action Average SL Tgt 1 Tgt 2 HCL Tech Software 776 Buy 750 730 805 830 Key levels Moving averages Support Resistance 21 day EMA 753.21 745 795 50 day EMA 762.23 735 810 200 day EMA 686.58 715 835  Bank Nifty is forming a double bottom formation on weekly charts withneckline placed at 10000 levels supported with a positive divergence with 14-week RSI and Stochastic line, and any positive closing above 10000 levels would guide the index towards the upper band area placed around 11000 levels.  On the daily charts, the index is struggling around its 50-day EMA levels and a failure to take-off the same would trigger a slide towards its immediate support placed at its 8 & 21-day EMA (9400 lev Our take: The counter is expected to continue its upward momentum to make new highs during the current month. Also, sharp fall of rupee against the dollar will be beneficial to HCL Tech and thus, the stock would attract value buying on any small decline. We suggest accumulating the stock for targets of 805 and 830 for the month with a stop loss placed at 730 levels.  HCL Tech has out-performed both Nifty and CNX IT in the month of June. The stock surged over 4% last month as against 2.5% gains in CNX IT, while the Nifty posted negative returns of 2.4%. The stock has been in a strong uptrend for the last 7-8 quarters. It has surged from the lows of 360 in the month of August 2011 to make its life time highs of 810 levels in April this year.  The stock has been in structural uptrend and is making higher highs and higher lows pattern. The stock witnessed profit booking from its life time high of 810 and slipped to 680 levels in less than 7 trading sessions. However, the stock has taken support at 700 levels and thereafter consolidated in the range of 720-760 for two months before giving breakout in the last week of June.  The momentum indicators have given fresh buy signal in the stock. Also, in the weekly chart, the RSI (14) and money flow index line are pointing upwards indicating the upward momentum likely to continue in the stock in the weeks ahead and push towards its life time high of 810 levels.  The stock is placed just above its short term moving averages, which will act as strong support and will arrest major downside in near term. Thus, any dips can be utilized for fresh buying into the stock.
    • 7 ValueMax Stock Sector CMP Action Average SL Tgt 1 Tgt 2 HDFC Bank Banking 669.5 Buy 640 620 710 725 Key levels Moving averages Support Resistance 21 day EMA 659.91 655 710 50 day EMA 668.92 640 730 200 day EMA 646.27 625 750  Bank Nifty is forming a double bottom formation on weekly charts withneckline placed at 10000 levels supported with a positive divergence with 14-week RSI and Stochastic line, and any positive closing above 10000 levels would guide the index towards the upper band area placed around 11000 levels.  On the daily charts, the index is struggling around its 50-day EMA levels and a failure to take-off the same would trigger a slide towards its immediate support placed at its 8 & 21-day EMA (9400 lev Our take: The stock is expected to remain bullish till it remains above 620 levels. We suggest accumulation of the stock on any declines for higher targets of 710 and 725 levels in the current month. Investors are advised to strictly adhere to the stop loss (closing basis) and target levels mentioned in the above table.  HDFC Bank has ended over 4% lower in the month of June, underperforming the Nifty by 2%. However, it outperformed its bench mark index Bank Nifty which lost over 6.8% during the last month. The stock has seen sharp bounce of 10% from the June lows in the last few sessions on the back of strong volumes. This indicates the reversal of the downtrend in the stock and resumption of upward momentum in the stock towards its life time high of 727 levels.  The stock has been in structural uptrend and has been making higher highs and higher lows patterns. The stock surged from lows of 150 levels in the month of March 2009 to highs of 727 levels in the month of May this year. The recent bounce suggests the resumption of uptrend to make fresh life time high in the near futures.  The recent strong bounce in the stock has pushed the stock above all its short and long term moving averages. Moreover, the increase in volumes during the recent rally suggests the inherent strength in the stock.  Among technical indicators, the 14-day RSI is pointing northward. In addition, the MACD line has made a positive crossover to the signal line, indicating bulls to take charge over the counter which could take the price up.
    • 8 ValueMax Stock Sector CMP Action Average SL Tgt 1 Tgt 2 Hindalco Metals 99.8 Buy 93 89 108 113 Key levels Moving averages Support Resistance 21 day EMA 99.30 95 101 50 day EMA 100.77 92 109 200 day EMA 108.54 89 114  Bank Nifty is forming a double bottom formation on weekly charts withneckline placed at 10000 levels supported with a positive divergence with 14-week RSI and Stochastic line, and any positive closing above 10000 levels would guide the index towards the upper band area placed around 11000 levels.  On the daily charts, the index is struggling around its 50-day EMA levels and a failure to take-off the same would trigger a slide towards its immediate support placed at its 8 & 21-day EMA (9400 lev Our take: The counter is expected to continue its uptrend and can see a sharp rally above 101 levels, which can push the counter to hit 110 levels. Investors are advised to strictly adhere to the stop loss (closing basis) and target levels mentioned in the above table.  Hindalco has outperformed its peers in the last quarter and has been the only metal stock to have given positive returns QoQ. It has built a strong base around the 90 levels and witnessed value buying interest on every dip towards those levels. Another important observation is that the stock witnesses sharp move when it bounces from the support zone of 90-92.  The stock has seen sharp cut from its 52-week high of 138 levels made in January 2013 after the meltdown in the commodity markets. However; it has taken support at the lower end of the channel on weekly charts.  On daily charts, even though the stock currently is placed below its long term moving averages, it witnesses sharp spike when it breaks past its 50-EMA. With the current market price hovering around those levels and with a sudden change in market sentiment in the last few trading sessions, the stock is expected to test its 200-EMA which is pegged at around 109 levels.  Among technical indicators, both 14-day RSI and Stochastics are in strong buy mode indicating confidence amongst the market participants and suggest a buying opportunity at current levels.
    • 9 ValueMax Stock Sector CMP Action Average SL Tgt 1 Tgt 2 ONGC Oil & Gas 331.1 Buy 317 302 352 365 Key levels Moving averages Support Resistance 21 day EMA 315.32 324 342 50 day EMA 317.86 312 356 200 day EMA 304.75 305 368  Bank Nifty is forming a double bottom formation on weekly charts withneckline placed at 10000 levels supported with a positive divergence with 14-week RSI and Stochastic line, and any positive closing above 10000 levels would guide the index towards the upper band area placed around 11000 levels.  On the daily charts, the index is struggling around its 50-day EMA levels and a failure to take-off the same would trigger a slide towards its immediate support placed at its 8 & 21-day EMA (9400 lev Our take: The counter is expected to continue its upward momentum and head toward its life time high of 370 levels in few weeks. Any decline in the stock would make risk-reward favorable for long positions. Investors are advised to strictly adhere to the stop loss (closing basis) and target levels mentioned in the above table.  ONGC has been trading sideways for the last six months in the band of 290-350. Value buying emerges in the counter whenever it dips below 300. The stock is in striking distance from its all time highs of 370 and with positive news flow surrounding the counter; ONGC is well placed to lead the rally in the Oil & Gas space.  The stock is currently trading above all its major moving averages on the daily charts. It has taken strong support at its 200-EMA on multiple occasions and seen sharp reversals towards newer highs. The weekly volumes are at 6-month high, with highest volume witnessed in Friday’s trade. This makes the counter attractive for buying and any dip can be used for fresh accumulation.  Among technical indicators, the 14-day RSI has given a strong buy signal with increased participation indicating bulls to take charge over the counter which could take the prices higher.  Another major boost for the stock in coming weeks is the approval by the Government of India to hike domestic gas prices to around $8.4 per MMBTU. This would translate into upgrading of earning of FY15, thus providing the potential for an upgrade from current levels.
    • 10 ValueMax Key levels Moving averages Support Resistance 21 day EMA 331.44 324 352 50 day EMA 342.68 316 368 200 day EMA 375.31 306 380  Bank Nifty is forming a double bottom formation on weekly charts withneckline placed at 10000 levels supported with a positive divergence with 14-week RSI and Stochastic line, and any positive closing above 10000 levels would guide the index towards the upper band area placed around 11000 levels.  On the daily charts, the index is struggling around its 50-day EMA levels and a failure to take-off the same would trigger a slide towards its immediate support placed at its 8 & 21-day EMA (9400 lev Stock Sector CMP Action Average SL Tgt 1 Tgt 2 Reliance Capital Financial Services 336.85 Buy 316 305 358 375 Our take: The counter is expected to rebound strongly from current levels if the overall market sentiment improves and the inherent high beta nature can lead to outperformance. Investors are advised to strictly adhere to the stop loss (closing basis) and target levels mentioned in the above table.  Reliance Capital has outperformed the broader market in the month of June. Prior to that the stock has corrected over 35% YTD from the highs of 500 levels, in line with the prevailing volatility in the market. The stock has built a strong base around 300 levels with value buying emerging on dips towards those levels. Also, the positive news flow among its group supported the stock to hold on to its supports.  The stock has been hovering around its short term major moving averages for the last few weeks. A close above 350 supported by increased participation would take the stock prices towards its 200-EMA which is pegged at around 375 levels.  Among technical indicators, the 14-day RSI has given a buy signal by closing above the 9-day EMA signal line. The stock can gain strong momentum if it breaks past 350 levels and can test 380 levels in coming weeks.  Reliance Capital is roping in foreign partners in its bid to apply for banking license which could be a positive trigger for the stock in coming weeks and could provide an opportunity for potential re-rating in the counter.
    • 11 ValueMax Stock Sector CMP Action Average SL Tgt 1 Tgt 2 Zee Ltd Media 236.05 Buy 220 210 250 260 Key levels Moving averages Support Resistance 21 day EMA 230.91 225 250 50 day EMA 229.91 210 265 200 day EMA 210.69 200 280  Bank Nifty is forming a double bottom formation on weekly charts withneckline placed at 10000 levels supported with a positive divergence with 14-week RSI and Stochastic line, and any positive closing above 10000 levels would guide the index towards the upper band area placed around 11000 levels.  On the daily charts, the index is struggling around its 50-day EMA levels and a failure to take-off the same would trigger a slide towards its immediate support placed at its 8 & 21-day EMA (9400 lev Our take: The counter is expected to continue its uptrend and can see a sharp rally above 250 levels, which can push the counter to hit new 52-week highs. Investors are advised to strictly adhere to the stop loss (closing basis) and target levels mentioned in the above table.  Zee Ltd has seen a decent rally from the May’12 lows of 120 levels and has made 13 year’s high of 255 levels in May’13. Thereafter the stock has witnessed profit booking which dragged the counter below its 100-day EMA at 215 levels. The stock then witnessed value buying and has seen a quick recovery to close above all its moving averages.  The stock has moved out of the consolidation phase and has given a breakout to the downward sloping trend line drawn from the highs of May’13. Moreover, the constant rise in volume during the last week is suggesting the strength in the stock and one can expect a positive breakout on the upside which may take the prices higher to retest its previous high of 255 levels.  On the daily charts, the stock is placed above all its Exponential Moving Averages and on the weekly charts, the stock is trading above its 13-week EMA.  Among the technical indicators, the 14-day RSI is trading in a comfort zone above the 9-day EMA signal line. Also, the MACD line has given a positive crossover to the to the 9-day EMA signal line, indicating the strength in the counter which could take the prices up to retest its previous highs of 255 levels.
    • 12 ValueMax KARVY RESEARCH DESK – RETAIL BROKING JK Jain jambu@karvy.com +91-9618087899 Karvy Stock Broking Limited “Karvy Centre”, Avenue-4, 2nd Floor, Road No: 10, Banjara Hills, Hyderabad – 500 034. India. Tel: 91-40-23312454; Fax: 91-40-23311968 Disclaimer This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Karvy Stock Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. The information given in this document on tax if any are for guidance only, and should not be construed as tax advice. Investors are advised to consult their respective tax advisers to understand the specific tax incidence applicable to them. We also expect significant changes in the tax laws once the new Direct Tax Code is in force – this could change the applicability and incidence of tax on investments. Karvy Stock Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Karvy Stock Broking Limited has not independently verified all the information contained within this document. Accordingly, Karvy Stock Broking Ltd cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Karvy Stock Broking Limited endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Karvy Stock Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Karvy Stock Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information.