Technical stock picks for your portfolio
11/15/2011 5:31 PM Tuesday
The NSE Nifty is back to its confounding stage. After almost 12 weeks of consolidation between 4720 and 5182, the obvious conclusion was an upside peppered with due corrections. A crack at the supply line (refer to chart) was expected, but it has disappointed again by even failing to test the aforesaid supply line. Needless to say, the short-term picture has obviously been under a lot of pressure, as the weakness has been all-pervasive and the advance-decline line has been rather shaky of late, while a lower top, lower bottom scenario has unfolded on the daily chart.
The almost impregnable level of 5182-5200 has also been pierced without much ado, indicating that some more downside cannot be ruled out. Mid- and Small-Caps (clearly weaker) have given downward bar reversals on the weekly chart, followed by further weakness. Banks have been market outperformers (negatively), while capital goods continue to remain depressed. Consumer durables have been under mild pressure, FMCG has posted a fresh all-time high, while pharma seems to be twiddling its thumbs for the past few weeks or so. IT has held its ground and realty too has drifted lower, while metals have remained weak.
The Nifty has reversed its fledgling upmove prematurely and with relative ease, which is slightly disconcerting. While all may not be lost yet, the near-term picture has turned negative, while the 5010-5030 level could stem the rot for the time being.
DSIJ technical stock recommendations
Indian Bank - CMP - Rs 213.45 - Buy
Indian Bank bottomed out by posting an intra-week low of Rs 63.75 during the week ended 13th March, 2009, and these levels have rarely been seen since. The scrip launched into an intermediate uptrend to peak at an intra-week high of Rs 195.70 during the week ended 23rd October, 2009. The stock couldn’t sustain these levels for long, and declined to post an intra-week low of Rs 154.20 during the week ended 26th February, 2010. It commenced its uptrend from here, and rallied to peak at an intra-week high of Rs 316.50 during the week ended 8th October, 2010.
Currently, Indian Bank seems set to stage an upmove after a decent weekly consolidation. With even the daily picture looking promising, a further upside from these levels cannot be ruled out.
Lupin- CMP - Rs 466.60- Sell
Lupin peaked at an intra-week high of Rs 134.00 during the week ended 2nd January, 2009, and declined to post an intra-week low of Rs 107.40 during the week ended 30th January, 2009. The scrip then launched into an intermediate uptrend, peaked at an intra-week high of Rs 312.80 during the week ended 31st December, 2009, only to enter a corrective phase, and declined to post an intra-week low of Rs 262.00 during the week ended 22nd January, 2010. The stock staged a rally to peak at an intra-week high of Rs 519.80 during the week ended 3rd December, 2010, and entered a corrective phase.
Currently, Lupin has reversed direction after receiving significant resistance from the Rs 493 level, and a weekly close below the Rs 450 level would mean the possibility of a further downside from here.
Pantaloon Retail- CMP - Rs 169.30 - Sell
Pantaloon Retail bottomed out by posting an intra-week low of Rs 105.30 during the week ended 13th March, 2009. It commenced a short-term uptrend and rallied to peak at an intra-week high of Rs 360.00 during the week ended 5th June, 2009. The scrip entered a corrective phase to actually bottom out by posting an intra-week low of Rs 252.05 during the week ended 17th July, 2009. It moved sideways before recovering to peak at an intra-week high of Rs 527.90 during the week ended 8th October, 2010, only to decline from here.
Currently, the scrip seems to be on the verge of forming a lower top, lower bottom formation on the weekly chart, indicating the possibility of a further downside from these levels.
Ultratech Cement - CMP - Rs 1171.35 - Buy
Ultratech Cement bottomed out by posting an intra-week low of Rs 343.00 during the week ended 16th January, 2009, took support on the Rs 351 (support) level, recovered smartly and peaked by posting an intra-week high of Rs 595.00 during the week ended 17th April, 2009. The scrip declined from here, struggled a bit, finally overcame its recently-posted high, entered a medium-term uptrend, appreciated to peak at an intra-week high of Rs 1172.20 during the week ended 9th April, 2010 and entered a corrective phase.
Currently, the stock could be commencing a short-term uptrend. With the oscillators looking positive, a further upside from these levels cannot be ruled out.
Sebi Disclosure: The author is an active market participant and could not only be having positions but could even be having contrary positions in the stocks mentioned above.
• EMA – Exponential Moving Average.
• MACD – Moving Average Convergence Divergence
• RMI – Relative Momentum Index
• ROC – Rate of Change
• RSI – Relative Strength Index
*It would be pertinent to note that these are just tools to arrive at a buy or sell decision. There are no absolutes in this sphere, so the best one can do is to minimise losses and let the profits run.
*In the event of a sharp movement materialising in the scrips recommended - both upwards or downwards (the analysis is done on Monday evening based on the week's price movements while market action can only be taken on Thursday) investors would do well to stay away. Despite an active movement in the scrip, if a need arises to trade - investors can use the support/resistance levels as stoploss and/or entry/exit for taking a position in the market. In spite of the above-mentioned statement, investors are advised to use their own discretion.
Find More Articles on: DSIJ Magazine, Technicals, Stock Recommendations, Technical Tips, Product, Large Cap, PSU