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NEW PICKS IN THE MIDCAP SEGMENT New picks have been added to the previous report released yesterday in the first few pages.

The old report starts from the Nifty Technical View

DCM SHRIRAM CONSOLIDATED

This is another agri pick with a growing seeds business. Technically the stock has given a price confirmation with a triangle breakout. Buy in two parts at 63-65.5 add on dips to 59-60 stoploss 58 target 75-80. The stock can also be kept as a core portfolio pick for a couple of years.


Asian Paints – At the upper end of a 2 year channel

A short term trade with a view of a few sessions. Buy at 176-174 stoploss 171 target 185-190.


GVK Power – Triangle Breakout with volumes

Nice consolidation and volume build up in last couple of weeks. Buy around 7.3-7.8 with an upside to 9-11. Stoploss 6.9


PENINSULA LAND – High risk bottoming out trade

Double bottom and strong volumes seen yesterday. Sustaining 32-32.5 is a reversal. Buy at 31-32.5 sl 28.5 target 36/41


TRF – Worst seems to be over

There was a time when this company was in the limelight few years back. The stock has seen a huge correction in last 2 years. Last 2-3 months of consolidation indicates a major retracement to 140-160 is possible. Buy at 110-116 with upside to 140-160 sl 104. Good volumes in last couple of sessions.


NIFTY – Getting Overbought but can stay here for sometime with

stock specific action.

The Nifty is in kissing distance of the 2008 highs at 6357.

But what is surprising is that volumes have not been on the supporting side in the

last move from 5700 to 6200.

On a long term seasonal basis what we have seen is November-Jan is generally a a

good period for broader markets but also at times a topping out period (some may

attribute it to Diwali and so on ).

Now on the technical factors one of the classical studies which has worked very well

in finding out topping out time periods have been oscillators.

If we look at RSI the oscillator it tends to top out is around 75 levels and a maximum

of 80-83 levels over the last 10 years data.

Although a RSI topping out does not lead to a topping out in Nifty right away but it

tends to make a lot of divergences and slow moves on Nifty before it turns towards

the downside.

The general observation is once RSI touches those zones either the market tends to

get sideways or go into a slow ascent with divergences. This period generally sees a

lot of activity in the broader markets and some wild moves in smallcaps.

Like in November 2010, January 2011, May 2012 we saw a lot of midcaps making

big moves.

From such a overbought zone the Nifty tends to get sideways (Jan-Feb 2012 and Nov

2012) or makes a major topping out as done in November 2010 and start of 2012.

So one needs to trade quickly in this period and focus on stock specific ideas

than on index trades. The lack of action will juice out all the shorts in the

system and continue the slow and sideways action.

The strategy on Nifty should be to look for sell around 6300-6400 levels and

buy stocks for quick trades.


Looking at the above technical picture of Nifty and broader markets we believe the strategy

should be to go stock specific. Also Midcaps and Smallcaps are still at 4500-5000 levels of

Nifty. This may create a lot of stock specific tradin opportunities in coming 2-4 weeks.

There could be some stock specific corrections in Nifty stocks and some sharp moves as

well.

At the same time we expect action to shift to midcap stocks which have been consolidating

for a long time due to the underperformance of the Midcap Index with the Sensex/Nifty.

Also generally this is also the time when a lot of smallcaps tend to move sharply giving

excellent trading opportunities.

We have also covered a few techno funda bets and turnaround stocks.

Hence we have come out with a detailed report covering possible actionable trades in the

report below.

Main Sections and Type of Ideas discussed are

1) Nifty 50 – Actionable Trades ( Long / Short ) and Nifty Detailed View

2) Midcap Technical Picks

3) Techno- Funda Bets

4) High Risk Momentum Trades in Smallcaps

5) Turnaround Stories

6) Concept Companies

Things to Note

The report has been made on basis of technical analysis and in good faith.

Past Performance is not a guarantee to the future. ( so even I have been wrong many a times before its not necessary I ll be again and vice versa )

Do not over-leverage.

Also do take care of the risk management and keep a strict stoploss. If you cannot

afford the stoploss don’t take the trade.

One of the ideal ways to trade would be to book partial profits and keep trailing

stoplosses to reduce risk and conserve profits.

No trading strategy allocation has been advised as every trader may have a different

style and methodology for allocation of funds.


NIFTY 50 – Actionable Trades.

Asian Paints – At the upper end of a 2 year channel

The stock has seen an amazing pullback to retest the previous highs of 524. It is again at the upper end of the 2 year channel. Also reaching overbought zones as well as divergences seen. Shorts can be initiated on rise to 520-535 zone with a stoploss of 545 on closing basis. Downside targets 480-450.


IDFC – Triangle Breakout

Decent volumes on the breakout today with a lot of consolidation for last two months. Crossed the 50 dema. Triangle Breakout with potential upsides to 108/114 and 125-130 in extreme case. Buying Area 98-101. Stoploss 96.9


Hero Motocorp – Flag Breakout Possible.

The stock is making a very slow ascent with higher bottoms and a resistance is seen at

2130-2140 levels. It can see a flag breakout above 2130-2140 which can target 2250 + levels. Pre-emptive buying can be done in assumption that the stock will breakout. Buying area 2060-2100. Stoploss 2035 Target 2250.


Cairn India – Triangle Breakout needs follow on momentum.

The stock has given a triangle breakout at 305-315 levels which has now turned up as a

support. A follow up action beyond 335 is needed for a move towards 370. Risk-Reward entry point would be at 325-330 levels with an upside target of 370. Given the slow move one can look at booking partial on rise to 345-350. Stoploss would be 315.


Bharti Airtel- Short Term correction in sight but long term breakout possible in next attempt.

On the daily charts the stock is facing a lot of resistance at 355-360 band where a lot of

trendlines come up as well as previous tops. This indicates the stock can see a short term correction but the risk-reward is not

favorable for a short trade. At the same time the longer term chart suggests a big triangle breakout possibility in

months to come. Investors with a medium term view can look to accumulate slowly in the zone of 330-

315 ( prefer buying on lower end ) Stoploss of 305 and possible upsides to 370-420.


HCL Technologies – Topping out Pattern

This stock was one of our favorites from 550 levels but has now finally started showing

topping out signs for a short term correction. A rising wedge pattern with a lot of negative divergences is a bad sign even for a longer

term trend change possibility. The breakdown is in place and a large candle on that day indicates the op of 1170 will be

tough to break. Selling can be done in the band of 1100-1140 with a stoploss of 1170 and downside

targets of 1030/980.


MIDCAP PICKS

TOP PICK – TATA CHEMICALS

A good double bottom and a range breakout on cards with the stock not far from 52

week lows. Expecting the stock to breakout above the resistances at 255-260. Buy around 250-255 add on momentum above 260 for a target of 275-290 and even 320

in best case. Stoploss 242 This is the TOP PICK with a high conviction and good risk-reward. A higher allocation can

be made here.


RALLIS INDIA – Long Term Favorite

The stock has made a good base around 140 levels and is now raring to break out of a 2

year resistance. The agri sector has been in the limelight and this could be one of the best bets. Accumulate at 150-165 zones. Although one may not need to keep a stoploss here but a

trading review be done if closes below 145. Upside to 200/250 in long term. Expecting the stock to breakout above the resistances at 255-260.


United Phosphorus – Triangle Breakout and Major Long term Breakout on cards.

The stock gave a technical breakout at 148-150 levels which will now become a support

zone. Another agri play. On the upside in the last 2 years 165-168 has been a tough barrier for the stock. Accumulate the stock on dips to 148-155 with a stoploss of 144. Partial booking can be done on rise to 165-170. Momentum above those levels can give a target of 180-210.


United Spirits – A trending trade

The stock has been in a nice uptrend for major part of the last year and the current

consolidation between 2000-2700 seems to be getting over. A sloping cup and handle pattern breakout is seen. Given the volatility in the stock one can use it to accumulate in intra day dips to 2620-

2670 or lower with a closing stoploss of 2550 and upside to 2900-3200.


TECHNO FUNDA IDEAS In this segment we cover stocks which are quoting at cheap valuations and are

about to breakout.

Gateway Distriparks

Even at current levels of 110 the stock is available at a dividend yield of 6% and will be a

big beneficiary once the economy picks up and reforms also. A high dividend payout ratio keeps the downside limited.

The stock has consolidated for quite some time at 100-110. Expect the stock to touch 125/140 levels in short term. This could also be a core portfolio pick with a view of couple of years. Accumulate the stock at 105-112


NBCC – The best PSU bet.

This is one of the few interesting PSU companies and also amongst the few who receives

money from the government as an advance whereas a lot of other listed players are yet to recover money.

With a huge cash reserves ( mainly in form of advances ), decent order book and further possibilities due to PWD status, Real Estate Project Profits on Completion Method gives a lot of clarity on future earnings.

The stock quotes at a yield of 3% and was in limelight at 160-190 levels a few months back.

The stock has made a double bottom around 100. Expect momentum to catch up in the stock in coming days.

The upside target could be 130/160 or even higher in long term. Accumulate at 105-118 with a deeper stoploss of 99. One of the only PSU companies with such clarity of future earnings and at cheap

valuations.


HIGH RISK Momentum Trades.

In this section we are covering a lot of smallcaps and highly volatile stocks which are about

to or already given good breakouts. The high risk is due to the volatility and deeper

stoploss. At the same time one can expect a quick jump of 15-25% in the stocks.

ADF FOODS – Channel Breakout

After a good rise to 90 in last year the stock has been consolidating in the band of 35-50

which on a range breakout gives us an upside of 15 bucks. Buy in parts at 52/48 with a stoploss of 46 and upside target of 60/65 in short term.


JSW ENERGY – Inverted Head and Shoulders

The stock is making an inverted head and shoulders / cup and handle pattern which has

a breakout above 47.7. Pre-emptive buying can be initiated at 45-46.5 sl of 44 and upside target of 51-55.


LT OVERSEAS Limited --- Rice stock

The DAAWAT brand of rice. There has been a good spurt in Rice stocks on back of some favorable reforms and one

of the technical breakouts which seems to be possible is in LT Overseas ( Daawat ) In the last 2-3 months there have been many attempts at 80 and over the last few years

85 has been a tough level to cross. One can accumulate the stock at 75-80 with a stoploss of 72 and upside target of 95-

100. Partial booking can be done at 86-90.


Shalimar – Bottoming out trade

A good fall followed by a consolidation for months and a slight uptick in volumes. Stock can see a sharp retracement to 70-80 in the short term. Buy at 58-60 with a

stoploss of 56.


TURNAROUND STOCKS In this section we are covering some particular companies which have fallen to dust after

their time in the sun years back and are possibly on verge of a long term turnaround and

can even end up as multibaggers in coming years. The ideal trade would be take out profits

on rise of 30-40% and create some free shares and forget them.

Triveni Engineering – A turnaround story

The current market cap is equal to the holding in Triveni Turbines (where a lot of

marquee names are invested) . This stake can be possibly sold of in coming years to raise cash. Many institutions were heavily invested at a price of 120 ( Triveni original ) and now at a combined price of 58 there is hardly any interest in this company.

The company has debts but a lot of inventory of Sugar and quite a lot of the losses have been written off. Any change in sugar sector will change the whole bottomline in a big way.

Also other businesses in Water Treatment and Gears etc will start contributing once the economy picks up.

There is not much to lose at the current price but a lot of triggers to take the company into a new orbit in the future.

Accumulate at 12-13.5


BALLARPUR INDS ---- Turnaround for a one time Sensex stock.

There was a time when this company was in the sensex decades back. The company has faced all sorts of problems in the last many years but seems there is a

turnaround in the paper business and hardly any new manufacturing capacity coming in. The debts may make it a risky stock but its already taken a huge hit on prices. Accumulate at 11.5-13 levels with a long term view.


Concept Companies This is a very interesting section where we look at companies which are having a strong product and can turn out to be long term core portfolio bets for an investor who may be ready to accumulate them over the next 6-12 months and hold for a period of 5-10 years.

1) Forbes and Company ( 545 ) A Shapoorji Pallonji group company ( biggest shareholder in Tata Sons after Tatas ) . The

oldest registered company in the world The company which came out with Vacum Cleaners and is now the major leader in

Water Purifiers. AquaGuard is like the colgate of purifiers. Huge Land Holdings (11 flats at volkart house) Many other small subsidiaries. Promoters increased stake this quarter. High promoter shareholding and low floating stock. There can be a time when every house has a Water Purifier like AquaGuard. A big

market can come up. Even if there is competition the growth can be big. At 700 cr market cap there is a huge scope of upside. The product can end up being considered as a FMCG product in years to come.

2) Bajaj Corp ( 233 ) There might be concerns on the company with the recent results as well as it being a

one product company but the recent acquisition of Nomarks is an indication of times to come.

Over the last 2 decades its not been the known FMCG names of previous generation like Colgate, Hindustan Unilever, Gillette have not been the best performers but FMCG companies like Marico and Godrej were 10-20 baggers.

So we believe this can be a company which can go on that path in the next 5-10 years. If not then it can be a steady compounder.

3) Smartlink Network Systems ( 44 ) This may be more a play on the huge cash the company has on the books but that gives

a lot of comfort too. At 300-360 cr cash the company still quotes at a market cap of 135 crores only. Promoter has increased stake almost to the limit of 75%. The management has been liberal in giving dividends. The company is starting again in making new products and there is a bright chance the

company turns around the current loss making operations in next couple of years.


One of the few manufacturing companies which can get into the wireless and mobile/tablet products space.

The credibility of promoter was cleared on payment of 25% of proceeds of the slump sale.

The company can turn out to be a multibagger in coming years if the business picks up. If not the cash discount will at least reduce over the years.

As a reminder please do read the Disclaimer at the Bottom. Also the above report is a view as published and it is advised every investor does his own risk management.


TEAM ANALYSE INDIA

Nooresh Merani CEO - Analyse India Cell: +91-9819225396

e-mail: [email protected]

N S Fidai Managing Director - Analyse India Cell: +91-9920120878

e-mail: [email protected] Ankit Chaudhary Technical Analyst and Derivative Strategist - Analyse India Cell: +91-9899899989

e-mail: [email protected]

mailto:[email protected]




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