Indian Banking Stocks

The week, 18^th July to 23^rd July 2011, again assumes importance for the banking stocks, with a number of private banks like HDFC, KOTAK and YES banks coming up with their quarterly results. No doubt that the sector has been on a roll for the past couple of years. In fact after the slow down in 2008 and 2009, the banking index has delivered a return of 82 percent (between May 2009 and October 2010), compared to a return of 40 percent delivered by the broader market. In 2009/10, banking was the safest bet as people had concerns about investing in other sectors like telecom, power, real estate, oil and gas. This was also due to the strong credit quality of Indian banks, which proved them resilient during the crisis.

The banking stocks got beaten down due to reduced credit off take, pressure on yields, which is flowing into valuations causing downgrades in this sector. Since November 2010, the bank index has underperformed compared to Nifty. With RBI hiking its key policy rates in each of its monetary policy announced in last year and more, there has been an overall increase in the lending and deposits rates. As interest rates raise credit growth moderates. In fact the credit growth has come down from 23.3% in January this year to 21.9% in April. Despite this some private sector’s banks’ performance is not that bad. It’s the public sector that is more out of the sync. The biggest disappointment has come from SBI. It declared a 99% dip in profits for the quarter ending March 31, 2011, due to provisioning on teaser loans, providing for pensions and gratuity shortfalls and higher NPA. There could be similar stories in other PSBs too.

Banks have been cautious about their growth and their aim is to maintain the net interest margin and quality of assets. Most banks have toned down their growth assumption for 2011/12. Inflation and interest rates are likely to remain high for some time because of easy monetary and fiscal policies in developed nations. Also, supply side constraints and disruptions in commodities like oil are also contributing to inflationary scenario.

Under all these constraints and more the earnings of this sector is expected to be on positive side. Private sector would just be a bit ahead then PSBs. And the investment in this sector with one year and more time horizon still seems to be attractive.

THE STOCK BROKING IS STRUGGLING

The figures of earnings are showing that the brokers are not fairing well at all in 2010-11. Not only the revenues due to lack in retail volumes have dried up, the IPOs a big revenue earner for retail broking are too disappointing. A lot of companies have shut shop, especially the Institutional or Retail or both too. The dearth and high cost of talent is another factor. All these are very obvious quantitative factors.

The most important constraint the brokerage industry faces is penetration and training. No single brokerage house has concentrated on these two very important long term factors. The acquisition staff is under trained and at best knows how to get an account open. Equity being a serious risk taking effort needs special attention to account holders and therefore a bit of special equity training to staff to handle clients. This one aspect is completely missing in the industry. And this could be determined by the number of inactive clients that each broker has.

Related to lack of training is the penetration issue. The equity market is not growing at a pace desired in an ever growing Indian economy. People lack knowledge and therefore trust and are afraid. Yes, this industry really needs “Preachers” more than anything else. People need to be converted and taught the religion of Equity, an asset class which cannot be ignored by the middle class of India.

Not only the broking houses but the stock exchanges, government and educational institutions too are not spreading the message of Equity. Market risk is perceived to be a synonym of complete loss in this asset class. Its high time that people associated with this industry perform a Satyagrah, and make others understand that it too is a field of  respect and knowledge.

MONTHLY ANALYSIS OF BANK OF INDIA ANALYSIS (13TH JUNE; 2011-31st JULY; 2011)

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CHART PATTERNS-Looking into the chart patterns of the stock clearly indicates that the

stock is in the bullish mode. It moves in the consolidation phase, and then breaks it off with

immense euphoria and vigor, then forming an abrupt high and again dropping off back to

the support level which was initially the resistance level for the stock. This time also the

stock had been staying within the constraints of the upper and lower range of Rs.392-480,

thus showing the probability of the stock to again move off to the higher levels, with the

minimum expected target prices of Rs.480, which is the resistance level of the stock and

once it breaks it off with good volumes, then another spate of an upside rally can be

witnessed in the stock to take off the high of Rs.585 in 6 months hence from the present

date.

MOVING AVERAGES-From 10th nov; 2009 till 30th april;2010, the stock had been

consolidating within the vicinities of 305-390 characterized with the minor bump ups and

down of the 20DMA with that of 50 and 100DMA suggesting the reversal in the movements

from resistance and support levels. From 14th July; 2010 onwards the stock broke off the

resistance level of Rs.390 followed by the golden cross over of 20DMA with 50, 100

and 200DMA again reaching up to high 584, thus forming a very steep cliff. That showed

the extreme bearishness in the prices of the stock. During that prices rally, 20DMA

continued to form the support from 20DMA. After reaching the high the stock clobbered

down heavily to the downside breaking off all the moving averages and sought the support

from 200DMA. The stock couldn’t hold off to those levels longer tore it off to take another

support at the level of Rs.392.

Again the 20DMA kept on playing around with other 2 moving averages making golden and

death crossovers indicating the minor reversal of the stock prices from the support and

resistance levels.

Currently, the stock seeking the support from 20DMA and 20DMA, attempting to make a

golden cross over with 50DMA and 100DMA shows the probability of the stock to turn its

back off from support levels and move upwards towards its resistance level of Rs.480.

However, on the INDICATORS side, RSI and Stochastic have already entered into their

oversold zones with the RSI showing some mild signs of turning around, thus giving an

indication to take a short term long position. Even the money flow index has also stabilized

and rising up again. Stochastic which is a momentum indicator has gone quite near to its

support level resorting at 2.7% in the oversold zone showing that the stock is nearing to

show an upward momentum anytime sooner.

FIBBONACCI ARCS

The stock has been closely rubbing off against the 61.8% arc retracement level and the

20DMA giving a good upside support to the stock is showing the likely expectation of the

stock prices to move up. The same pattern was witnessed by the stock from 14th august;

2009 onwards when the stock was moving in the consolidation phase and the prices with

the support of the Fibonacci Retracement arcs in close support with 20DMA rallied up higher

to break off the resistance level and taking up the high of Rs.464 for the upcoming sessions.

From the above chart, the upside arrows are clearly indicating that whenever the stock had

took the support from the 20DMA, the prices have rallied higher up. The same pattern has

been formed by the stock currently and the prices are again expected to test the resistance

level once again.

CONCLUSION- It is recommended to go LONG in the stock Rs.418 with the target price of

Rs.474, with a time range of about one month at least thereby applying the stop loss at

Rs.390 to the downside, which is staying just below the stiff support level for this stock. Unless it breaches the

support, one shall continue to stay bullish in the stock.

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SELL IN MAY

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The fear that stocks are overdue for a correction has been playing in the minds of many investors and specially with the period of MAY- October knocking at the doors.

Yes there is a new concern, statistically at least. The arrival of May means the beginning of a six-month period in the stock market when returns typically are lower at best and often negative.

A seasonal position strategy, with numbers to support suggests that it is better to sell in May and go away and then again come back in November and return to buying. If one keeps doing this every year one would be way ahead of others.

Before we go ahead I would remind you tat there is no easy way to buy and sell in market and never try to time the market.

Sell in May, the concept has compelling support:

Since 1950, the Dow Jones industrial average has produced an average gain of 7.4 percent from November through April and 0.4 percent from May through October.

_ An investor who sank $10,000 into the Dow during the “best” six-month period (November through April) and switched to bonds during the “worst” six months in every year since 1950 would have posted a return of $527,388, according to the Stock Trader’s Almanac. Doing the reverse would have cost the investor $474.

_ Applying the approach to the Standard & Poor’s 500 index, its returns from November through April have beaten those during the following May-October period 71 percent of the time dating to 1945.

_ Adhering to the practice also would have reduced risk. For whatever reason, the stock market crashes of 1929, 1987 and 2008 occurred between May and October.

Why does it work?

While you may call it a random pattern or statistical anomaly, the period from May to October features less market activity. This year, the approach may seem especially timely to those who believe the market is poised for a pullback after a period of remarkable gains.

Roaring back from the financial meltdown of 2008 and early 2009, the Nifty and Sensex has risen back after bottoming out nearly 14 months ago.

And if you believe this bull market has come too far, too fast, and believe a challenging period lies ahead for stocks, you may want to consider this semi-annual rotation strategy of SELL IN MAY.

Given how well the market has done over the past twelve months, perhaps this is the year that the theory will work like a charm.

APOLLO TYRES-ANALYST’S VIEW(FROM 25TH APRIL;2011 ONWARDS)

DATA ANALYSIS-Throughout the year of 2010, 71 has been imparting a good resistance to the stock. Most of the time whenever the stock has revived from 69 levels, either it has been resisted by 71-72 levels to close below it or it has moved up heavily upwards to test Rs.78 levels in the forthcoming sessions. Closing above 71 levels signifies that the stock has finally manages to break off the resistance levels and there is a strong rally awaited to be taken place by this stock.
MOVING AVERAGES-The sharp turnaround of the 20DMA and 50 DMA making a golden cross over with 100DMA is a sharp evidence to take a buy bet in this stock. Looking into the prior patterns, turnaround of the 20DMA to the upside has been the indicative of the sharp rally in the prices of the stock and the same behavior is likely to have been adopted by the stock. The 20DMA has been imparting a good support to the stock and sharp way up of the 20DMA is expected to carry the prices up to test at least 78 levels within the forthcoming week.
CHART PATTERNS- The stock had formed an ascending triangle formation from 16th july;2010 onwards and the breakout from 18th aug;2010 carried up the prices heavily to the upside till 78, from where the minor retracement took place, however, 20DMA continued to entail good support to the stock. No doubt the long term view of the stock is extremely bullish but for a short term perspective, the buy call up to Rs.78 shall be the safe bet.
By following up the Fibonacci arcs, when the stock prices lumber jacked, the prices have started off with a sharp rally to the upside from 61.8% retracement levels. The stock has even broke off against all the adjoining arcs and have yielded a strong breakout of it with heavy volume suggesting the bullish regime of the stock.
INDICATORS-The stock has given an upside breakout of its Bollinger bands which has been indicative of the sharp upside rally on hold for the stock. Delving into the prior patterns of the stock in terms of the Bollinger bands, whenever a breakout has taken place, the prices have continued to move higher.
On 24th feb;2010, with the advent of the a breakout from the upper band of the Bollinger bands, the prices have been rallied up higher by about 8 rupees. Similarly, the breakout from ascending triangle pattern supported by an upside breakout of the Bollinger gave an enough fillip to the stock to rise up to 78 levels within a range of about 3-4 days which later on pulled over to resort high till 88 levels. The similar pattern has started up this time also when the same breakout is coupled with assistance from the Bollinger bands which have sharply turned upwards.
The momentum indicators have also turned up sharply from 50% liberating excessive exuberance in the stock and a strong bullish picture of the stock.
CONCLUSION- GO LONG IN THE STOCK WITH AN ENTRY AN EXIT PRICES OF Rs.73 till Rs.78 EXPECTED TO BE ACHIEVED WITHIN 7-10 DAYS IN THE FORTHCOMING SESSIONS WITH A STOPLOSS AT 70.WITHIN A MONTH OR SO THE PRICES ARE EXPECTED TO GET CARRIED OFF TILL Rs.82.

Disclaimer -These calls are based on the theory of technical analysis and personal observations and are not recommendations to any person to buy or sell any securities. The information is derived from sources that are deemed to be reliable but its accuracy and completeness are not guaranteed. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their actions and profit or loss. It is only the outlook of the market with reference to its previous performance. You are advised to take your position with your sense and judgment. We are trying to consider the fundamental validity of stocks as far as possible, but Stock market is highly unpredictable and demand and supply affects it. And author won’t be liable or responsible for any legal or financial losses made by anyone.

FIBBONACCI ARCS HAVE BEEN PLAYING A MAJOR ROLE IN HINDALCO

Right from 4th March; 2009 onwards where the stock had swooped to its lower levels, it had shown up a sharp rally adopting a rowdy behavior making higher highs after the minor retracements. Drawing the Fibonacci arcs are suggesting the activity of the stock to breach all the adjoining arcs and making another high. An upward sloping support line has been in complete conformity of the fact that the uptrend of the stock was truly intact.
After taking an extreme high of Rs.193 as on 12th april;2010, the rally subsided in the stock for some time and the stock retraced by about 61.8% Fibonacci retracement and taking the resistance from the terminal arc at Rs.136 before it finally picked up the rally again and making another set newer higher highs. The retention of the support level at from 22nd dec; 2009 onwards taking a stiff support at Rs.136 seemed to be the resting stages for the stock after such a rampant and vigorous rally. The stock formed an head and shoulders pattern over those levels with Rs.136 acting as the neckline for the stock. But the 100 and 200DMA were in a rising mode leaving no scope for the stock to fall down. 200DMA was imparting a stiff support to the stock right from 4th march; 2009 when the upside rally in the stock finally begun. While the stock was in a breath taking mode from 22nd dec; 2009 onwards and took up the support at Rs.136, it slightly tried broke off the 200DMA, but formation of the morning star gave enough respite and strength to the stock to begin its rally which happened with the stock attempting to make another set of higher highs in the later stages till it finally reached to the another extreme level of Rs.253 on 6th july;2011.
Again the stock seems to be in its resting stage and have laid down the formation of the multiple head and shoulders pattern (the same it did so from 22nd dev; 2009 onwards). The neckline and the support level have been imparted by Rs.200 this time with the retracement again seems to have begun from the last leg of Fibonacci arc retracement (61.8%). The stock again tried to breakaway the 200DMA to the downside but the formation of the bullish haraami cross pattern kept the stock truly boisterous to resume the support again. The formation of the golden cross over of the 20DMA with 50DMA on the verge of completion is spawning the rosy picture for the stock to pick up the rally again after the rest and expect to go up to the minimum target level of Rs.253 (which was the highest high of the stock right from when the rally started in it).
Even the dividend growth model is suggesting that the stock is still undervalued by the market and is still to go up lot more to break off the 300 levels in future, with the intrinsic value of it coming at around Rs.357, which seems to be truly in conformity with the technical charts and patterns.
However, it is advisable to take your positions at Rs.220 levels with an expected minimum target of Rs.253 for the time range of about a month or so. After the successful achievement of the aforesaid target level the next conceivable target would be Rs.300.
MACD indicator has not yet left out its support level (-7.27) and is rising up giving way for the stock to continue with its rally with minor retracements in the interim and retesting Rs.253 levels again in the forthcoming trading sessions and staying in close support with the 20DMA.

Disclaimer -These calls are based on the theory of technical analysis and personal observations and are not recommendations to any person to buy or sell any securities. The information is derived from sources that are deemed to be reliable but its accuracy and completeness are not guaranteed. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their actions and profit or loss. It is only the outlook of the market with reference to its previous performance. You are advised to take your position with your sense and judgment. We are trying to consider the fundamental validity of stocks as far as possible, but Stock market is highly unpredictable and demand and supply affects it. And author won’t be liable or responsible for any legal or financial losses made by anyone.

AUTHORED BY:
SUDEEP AGARWAL( TECHNICAL ANALYST)

GAIL – TECHNICAL ANALYSIS FROM 8TH APRIL;2011 onwards

 

Technical Analysis

Technical analysis

 

CANDLESTICK PATTERNS

The narrow trading band was formed from 10^th may; 2010 onwards and ended after the high of Rs.516(resistance ) was attained by the stock. After the prices boomeranged back to the support level, another upward sloping narrow trading band formation took place with the formation of the bullish abandoned baby candle at the support level which carried the prices higher again to get back to its former resistance level. Third upward sloping trading band formation took place after the low of Rs.471 till the high of Rs.538 as on 6^th jan;2011, when the formation of the shooting star again pulled back the prices of the stock back to the support level of Rs.424 as on 4^th march;2011.

From 1^st march; 2011, the formation of the bullish piercing pattern is again suggesting the maintenance of support level in this stock. The stock has already come within the constraints of the upward narrow trading band suggesting the repetition of the same prior bands and the expectation of the stock to rise up to take the high of Rs.516 again.

MOVING AVERAGE ANALYSIS

The narrow trading band was formed from 10^th may; 2010 onwards and ended after the high of Rs.516(resistance ) was attained by the stock. After the prices boomeranged back to the support level, another upward sloping narrow trading band formation took place with the formation of the bullish abandoned baby candle at the support level which carried the prices higher again to get back to its former resistance level. Third upward sloping trading band formation took place after the low of Rs.471 till the high of Rs.538 as on 6^th jan;2011, when the formation of the shooting star again pulled back the prices of the stock back to the support level of Rs.424 as on 4^th march;2011.

From 1^st march; 2011, the formation of the bullish piercing pattern is again suggesting the maintenance of support level in this stock. The stock has already come within the constraints of the upward narrow trading band suggesting the repetition of the same prior bands and the expectation of the stock to rise up to take the high of Rs.516 again.

CHART PATTERNS

While the stock was shuttling within the trading band, in the range of Rs.424 and 517, the formation of the inverted head and shoulders formation with the head touching the support level suggested an upside breakout in the prices to catch up with its resistance level of Rs.517. The pattern suggested the expected breakout by 50 points from the neckline which stood at Rs.474 to the upside and the stock did the same with the breakout by almost equivalent points to carry the prices to the resistance level of Rs.516

The same inverted head and shoulders pattern formation has been completed and an upside breakout has been successfully exhorted by the stock from its neckline of Rs.462. The pattern is suggesting the price rally by Rs.38 to the upside which is expected to carry the prices till Rs.500 mark in the forthcoming sessions.

Indicators

RSI and STOCHASTIC INDICATOR have been showing the cyclical patterns after taking the stiff support from 50% level and travelling back to the overbought, whenever the stock had come within the proximities of the trading band. Moreover, the formation of the bullish convergence pattern in RSI, STOCHASTIC and MONEY FLOW INDEX are imposing boisterousness in the stock to travel to the higher levels to test the 500 mark in the forthcoming sessions.

CONCLUSION- It is recommended to buy the stock on every dip, the first buying opportunity is expected to revealed at Rs.468 and continue to hold it for say about a month or so), where it is expected to test Rs.500 levels and yielding a return of about 7.52%

 

 

 

 

 

Will the NIFTY TEAM add the same spice to the trading match like our Indian Team has been in the World Cup??

On 30th March;2011 our Indian cricket players gave a rollicking performance against Pakistan. We all were having goose bumps in our stomach thinking whether we would be able to notch up a victory against Pakistan or not? No doubt Indians have always staged victory against Pakistan in all the world cup semifinals matches and this time also we were keeping our fingers crossed. After all more than a game play it was the rivalry match for the country and in no way we could have afforded to digest the loss especially when it comes against Pakistan.
But history really repeated itself in the yesterday’s match and we came out successful enough in pulling down the Pakistanis again. All the cricket fanatics were waiting for this magnificent event from a very long time. First it was South Africa which proved to be the first resistance level for the country and then the victory over Pakistan was very important for us to set the stage for the finals against Sri Lanka.
Even, when the Indian cricket team was running feeble and it couldn’t perform in the World Cup-2010, all the cricket lovers and even the players went into the extreme stage of depression and despair. So shattered were our confidence levels that even the bookies bit their nails before plunging into any kind of bet in favour of the Indians. But with the incessant knock out of some of the big players like South Africa, West Indies, the confidence revived in the people again to think off the rosy future of the players. This was quite evident from the faces of the big personalities present there. After all Sonia ji, Manmohan Singh ji , big business tycoons like Vijay Mallya- the CEO of Kingfisher Airlines etc.( some of the venerated people of India and busy in raising the nose of the nation high)had spent the whole day out of their busy schedules to cheer for the country. Everyone’s faces were brimming with pride and ecstasy when we knocked the Pakistanis down. Wasn’t it the outburst of their confidence and sense of pride for the nation that brought them there?? Of course it was.
The same seems to have been happening with the Indian markets as well. After a plethora of setbacks and defeats, domestically as well as globally, all the investors were running dizzy about the future of the markets. Even the Nifty which was about to yield a breakout much earlier from its inverted double top pattern to the upside from 4th march;2011, went subdued after slightly breaching away the 5600 mark mildly by 15 points above. Global uncertainties exacerbated by the spate of crises, rise in crude oil prices, increasing inflation all shook the confidence of the investors so hard that made Nifty forming a unique ascending triangle pattern which we didn’t witness before. The investors had grown skeptical in pledging their bets in equities and overall future seemed melancholic and bleak for the markets, the same which happened with India in previous year’s world cup. But with the advent of the markets breaking off the crucial levels over 5690 seemed to have brought the cheers back again from the investors and they are again resting their hopes in the fact that the history for nifty has again started getting repeated from now onwards. With the ongoing rally and the improved global and domestic sentiments intact, we may expect the markets to show up the same rally which it showed from 7th sep;2010 onwards, when it strongly broke off the Bollinger bands on the upside and rose to the 6300.
Sterlite Industries, our VIRENDRA SEHWAG, after some slow deliveries in the prior matches couldn’t move past the score of Rs.170. Every time it tried to strike his bat beyond that score, it used to get knocked out by some of the magnificent deliveries by the sellers. But this time from 15th dec;2010, he seems to have started paying cautiously and steadily now taking up the score beyond Rs.170 now. Our Sachin Tendulkar, the HDFC BANK has been showing its usual good performance by giving a tangy flavor to the match right from 23rd march; 2011 onwards and playing sling shots to bag up the magnificent score of Rs.2364 from his usual average runs of Rs.2055. Even AXIS BANK, our Yuvraj Singh has been steadily showing a continuous improvement from 14th Jan; 2011 onwards, every time inching up an improvement in his score by Rs.39 on an average. I am sure that this time it would surely hit a half century. Even the middle order batsman of our team- HINDALCO seems to have sought guidance from his mistakes from his prior sluggish performance, where he was constantly dragged down by the sellers dropping his average score from Rs.247 to Rs.197 from 3rd feb;2011 onwards. I think our DHONI- JINDAL STEEL made up a blunder in putting him up on the 5th position. He himself would have taken the charge of the match otherwise our team wouldn’t have had to face such failures in the beginning. No worries Nifty- just keep on hitting higher highs this time and surely our NIFTY TEAM will win the cup of 6300 levels.
Will the Indians be able to score victory against Sri Lanka and bring back the cup home?? Whether the financial markets like India would be able to put up the same victory which our players have fancied against Pakistan??? These are some of the questions boggling into everybody’s mind. People just like with the Indian players, you keep your hopes and confidence revved up with markets as well and surely we will hit the higher marks this time and bring back the golden cup of 6300 home again.

TECHNICAL FORECASTING OF NIFTY(29th march;2011 onwards)

 

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After the breakout from its ascending triangle pattern, the formation of the breakaway gap has bolstered the fact that a good rally in the nifty levels is there on hold for the upcoming sessions. However, a minor setback is expected to take place at 5750 levels where the nifty levels would again seek the support from the neckline. The stochastic has already reached its overbought regions and is expected to hit the resistance level in the overbought zone at 97% level where the market would have already notched up till 5760 levels. 5760 levels are crucial from the point of view that it is the target level of the market where the markets are at least expected to snap with the advent breakout of its ascending triangle pattern. The global pressure which had battered the markets for so long seems to have fizzled out and soon we could expect a rally on Nifty to rise up till 5950 levels.

OBV indicator is in its usual mode of making the higher highs signifying the much waited upward rally in Nifty. The upward channel of the OBV is witnessing the incessant higher highs with the next higher high expected to witness when the market finally reaches the 5755-5760 mark and shall witness minor hiccups at that level. A minor pull back from 5680-5690 shall again pull the markets back up to the higher levels. The OBV indicator is clearly suggesting that the upward rally in Nifty has already started.

MACD indicator has been constantly rising up with the minor rub off with the signal line forming the wave like patterns supported by the rising histograms. This shows that the overall trend of the markets is still on the upside and 200DMA is not likely to breakaway so easily to the downside.

100DMA has started to show the signs of turning up again over the 200DMA with the golden crossover of 20 DMA with 50 DMA already completed signifying the resumption of the uptrend on the nifty.

 

MAHINDRA AND MAHINDRA TECHNICAL ANALYSIS (25th March; 2011 onwards)

 

Technical Chart for M&M

 

It is recommended to take a long position in this stock. As per the data analysis the level of 665 has acted as a first good resistance for this stock to close below it and when it has crossed that level Rs.673 acted as the another resistance target for the stock which it had hit. On 1^st march 2011 when the stock jumped from the high of 640 to take the high of Rs.670, to close at 662, then the next session witnessed the stock to go up to the 674 levels. Even on 11^th feb;2011, the stock gave up the rampant breakout from 669 to 689 even breaching off the levels of Rs.674.On 13^th sep;2010 also the stock gave a breakout around the same levels to take another high of Rs.678 after 2 days. On 30^th April; 2008 also the stock gave a significant breakout from the high of Rs.648 till Rs.689 passing by the Rs.680 mark. On 25^th Jan; 2008, 27th Feb; 2008 and 19^th march; 2008 the similar breakout took place. Similar breakout was on 30^th Aug; 2007. Even on 26^th sep;2006 the stock followed the similar pattern which it had been following currently evidencing the fact that even if the up move couldn’t be sustained by the stock testing 673-674 levels has nowhere gone. On 4^th may; 2006 also the upside breakout took place in this stock carrying the prices higher up to 674 from the high level of 660 on the previous day.

Hence the data patters are suggesting the increasing chances of the stock to go to the high levels of Rs.673-674. But since the volumes are moderate, another breakout cannot be seen so soon. The stochastic and RSI are showing the increased chances of the stock to continue with its up move in today’s session as well. Moreover, the stock seems to have been forming up the right head of the inverted head and shoulders pattern which it completed on 26^th feb;2010 during the event of the turnaround of the 20DMA. At present the 20DMA has started showing the signs of turning around showing that the stock is expected to reach till its neckline which is resorting at 680 levels. So if the stock continues it’s up move today also, Rs.680 would be the level to decide the extent of the optimism in the stock.

Another pattern to closely watch out for this stock is that of the ascending flag pattern and the imminent upside breakout after consolidating for some time is enough evidence of the ongoing bullish sentiments of the participants in this stock. The length of the flagpole is ranging at around 40 points and and the expected target price is also considered to be at Rs.690 from Rs.650 levels where the breakout took place (a movement of at least 40 points). Hence the stock is expected to hit the target levels of Rs.690 to give do justice to the inverted head and shoulders pattern. Right now a LONG position can be taken from the current levels till Rs.690 as the first target.

Hence if the stock carries along with its breakout, another target would be that of Rs.690 to firmly watch out for this stock.