Keep Safe Distance From These Team Of 10

After exhaustive research, DSIJ traces 10 stocks which may not do much good to your portfolio and may even harm the commercials. Karan Bhojwani justifies why these stocks can be the perfect ones to stay away.

The year 2015 witnessed a scintillating performance from the broader market and it was a regular affair to hear on the television news channels or to read the headlines in the newspapers which highlighted that the once a non-performing stock turned into a ‘dark-horse’ or a ‘multi-bagger’ which happens to deliver a multi-fold returns in the short span of time.

However, 2016 has gotten off to a threatening start and greed is giving way to fear amongst the stock market investors and traders. The first half of January has been the weakest one in the past 4-5 years and there have been several causes of turmoil that had put the indices in the ‘correction’ mode to start with the global factors such a fall in the Chinese market, the crude oil tumbling to twelve-year lows and domestic issues such a contracting IIP Data, accelerating CPI and delays in the passage of important reform bills.

With intensifying volatility, mounting global concerns and the continuous outflow from the FIIs,0it definitely feels like it is going to be a stock picker’s market in the 2016 and what an investor or market participant avoid putting in their portfolio could be as significant as the selections that do make to that portfolio. Considering this, DSIJ Technical Team has refined ten stocks out of Nifty 500 index on the basis of technical patterns and parameters to avoid or sell.

1.     Apollo Tyres:

The stock is currently trading at Rs 139.30. Its 52-week high/low stands at Rs 249.80 and Rs 136.85 on February 3, 2015 and January 15, 2016. On the weekly time frame chart after registering 52-week high around levels of Rs 249.80, the stock formed a negative divergence on the RSI and entered into a downtrend. Currently, the stock has seen breakdown of the head and shoulder pattern on the weekly time frame along with rise in the volume, which indicates that liquidation has been happening in this stock.  On the weekly chart, we have observed the death cross over signal which is a solid confirmation of a decisive downturn in the stock. The momentum oscillator like weekly RSI is in declining mode and not in the oversold region. Considering the bearish reversal pattern of head and shoulders and death cross over, its likely stock will be under pressure.

2.     Sun Pharmaceuticals:

The stock is currently trading at Rs 787. Its 52-week high/low stands at Rs 1200.80 and Rs 704 on April 7, 2015 and November 24, 2015. On the weekly chart, the stock formed a potential gravestone doji at 52-week high level with a long upper shadow and this candlestick has indicated that the uptrend is running out of steam.  On the weekly chart, the stock has seen breakdown of head and shoulders pattern in the month of November and recently the stock has touched neckline of HNS and was not able to push price higher above the neckline.  On the weekly chart at death cross over signal has been observed, which act as a confirmation of downtrend. Weekly RSI has registered a double top around 54 levels. Hence, we are of the view that this stock will have a muted upside and may underperform in the future.
[PAGE BREAK]

3.     Reliance Infrastructure:

The stock is currently trading at Rs 493. Its 52-week high/low stands at Rs 621.90 and Rs 281.55 on January 15, 2016 and August 25, 2015. This stock from the ADAG has seen a spectacular run-up in otherwise a sluggish and volatile market. On the weekly time frame, if we plot a trend line from high of Rs 2641 which was registered in the year 2008, we get a downward sloping trend line and recently after a strong up-move the stock has reversed exactly after touching downward sloping trend line, which means the stock is facing resistance at the long term trend line. The stock has formed a potential DOJI Candlestick pattern at the trend line resistance on the weekly time frame. The stock has faced resistance around 61.8 per cent retracement as define by the Fibonacci retracement level marked from the high of Rs 814.50 to low of Rs 281.55. Taking into consideration the above technical factors, it’s likely that the stock will move in southward direction.

4.     PVR

The stock is currently trading at Rs 789. Its 52-week high/low stands at Rs 887.90 and Rs 607.30 on November 3, 2015 and February 25, 2015. On the weekly time frame, the stock has formed a double top reversal pattern and this is a bearish reversal pattern and this pattern consists of two consecutive peaks that are roughly equal with a moderate through in-between.  The first peak was formed at Rs 885 and second peak at Rs 887.90. Both the peaks had a long upper shadow which indicates the stock was not able to sustain at higher levels. Now going forward if it sustains below Rs 740 on a weekly chart, then the down move will accelerate. The weekly RSI is forming sequence of lower top lower bottom which is negative for the stock.

5.     Kalpataru Power Transmission

The stock is currently trading at Rs 208. Its 52-week high/low stands at Rs 291.80 and Rs 193.50 on August 6, 2015 and January 15, 2016. The stock on the weekly time frame chart has formed a double top reversal pattern and this pattern is considered as a bearish reversal pattern. The stock has also formed a ‘Dark Cloud Cover Candlestick Pattern’ around the second peak which stands at Rs 285. The stock has seen breakdown of a triangle pattern as well along with a big bearish candlestick pattern. The momentum oscillator is forming sequence of top lower bottom and has been quoting below its nine week average. This is negative for the stock. Considering above factors, the stock is likely to underperform in the short-medium term.
[PAGE BREAK] 

6.     Wockhardth:

The stock is currently trading at Rs 1287. Its 52-week high/low stands at Rs 2000 and Rs 1021.10 on April 8, 2015 and January 15, 2015. The stock after registering its 52 week high around Rs 2000 level, formed a Doji candlestick pattern and entered into sideways to corrective mode. Currently, the stock has seen a breakdown out of symmetrical triangle pattern with a bearish candlestick pattern and along with rise in the volume, making for an ideal breakdown pattern.  On the daily chart, the stock is trading below its important short-medium and long term moving averages confirming bearishness in the stock. On the indicator front, the weekly RSI has turned down after making high of 60 and now it’s trading below its nine-week average adding to further bearish indication. With the daily and weekly set-up looking bearish, it’s likely that the stock will move further downwards.

7.     Sintex Industries:

The stock is currently trading at Rs 75. Its 52-week high/low stands at Rs 136.60 and Rs 74.10 on March 13, 2015 and January 15, 2015. The stock on a daily time frame chart is trading below its important short-medium and long term moving averages i.e. 21-day EMA,50-day EMA, 100-day EMA and 200-day EMA which is negative for the stock. Recently, the company posted its quarterly results and markets’ participants were not impressed by the quarterly performance and the stock witnessed a breakdown of ‘Triangle Pattern.’ This breakdown was accompanied with more than average volumes, which indicates liquidation has been taking place in the stock. On the weekly chart, we have observed the death cross over signal i.e. 100WMA trading above 200WMA, which is a solid confirmation of a decisive downturn in the stock. Considering the above evidence, we can draw a conclusion that the stock is likely to underperform in future.

8.     Tata Coffee

The stock is currently trading at Rs 95. Its 52-week high/low stands at Rs 113.80 and Rs 83.55 on January 11, 2016 and November 9, 2015. On the daily time frame chart, the stock registered its 52-week high around levels of Rs 113.80 and marked a bearish divergence on RSI.  On the daily chart, the stock has formed a Bearish Harmonic Pattern which is named as Bearish Anti Cypher and this is negative for the stock. The stock has turned down after forming a negative divergence and is now trading below its nine-day average which is negative for the stock.  Considering the bearish pattern and RSI negative divergence, it’s likely that the stock may see a muted performance going forward.

9.     Unichem Laboratories:

The stock is currently trading at Rs 243. Its 52-week high/low stands at Rs 334.10 and Rs 173 on October 6, 2015 and June 8, 2015. On the daily time frame chart, the stock is trading below its important short-medium and long term moving averages i.e. 21-day EMA, 50-day EMA, 100-day EMA and 200-day EMA which indicates bearishness in the stock on the all the time frames. Recently, the stock has witnessed breakdown from a bearish pattern i.e. head and shoulder pattern and this is negative for the stock. The daily 14 period RSI is continuing sequence of lower top lower bottom indicating lack of strength in the stock. Traders and investors may see further pain in the stock as technical indicators are not so encouraging.

10.     Jain Irrigation systems

The stock is currently trading at Rs 61.50. Its 52-week high/low stands at Rs 78.95 and Rs 50.50 on July 23, 2015 and August 25, 2015. On the daily time frame chart, the stock is trading below its important short-medium and long term moving averages i.e. 21-day EMA, 50-day EMA, 100-day EMA and 200-day EMA, indicating bearishness in the stock for all the time frames. On the daily time frame chart, the stock has also formed a double top reversal pattern around levels of Rs 78-79. Stock has not been able to cross its 61.8 per cent retracement level marked from high level of Rs 100.1 to low of Rs 50.50 in the past 12-13 month time frame. The 14-day RSI has slipped below its 9-day average and is in declining mode. Hence, we are of the view that this stock is likely to remain muted and may under perform in the medium term.