Bull therapy 101-thread for technical analysis with the fundamentals

Nifty pharma completed retest of downward channel breakout.
Fundamentally, Indian pharma sector should benefit from commodity breakdown, with lower raw material costs/ lower logistics cost/ power cost. It can play out as a defensive sector incase of a global meltdown.

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you have made an interesting observation indeed.
On the weekly timeframe it does appear that a channel breakout has happened.
However, if we look at an even larger timescale, say the monthly timeframe, things look quite different.
Looking all the way back to 2006, uptrends in NIFTY PHARMA have sustained only when it has closed above 20-month MA, followed by a confirmation in the subsequent monthly candle ( marked in red , middle of the bollinger band ).
The risk -reward will skewed towards an uptrend only when it closes above 13400 ( This also happens to be resistance zone for the previous major monthly peak in sep-15.
[Disc] : Recently exited my pharma bets in losses !

Regards,
Abhijit.

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KOPRAN Weekly Chart, Trendline break

Fundamental:

Market Cap ₹ 828 Cr.
Stock P/E 13.3
Dividend Yield 1.76 %
ROCE 21.4 %
Sales growth 9.04 %
NPM 12.8 %
Profit growth of 25% CAGR over last 5 years

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Rbl bank cup with handle pattern the banking stocks are out perrforming the broader markets and results are also being excellent with the credit growth picking up. Rbl bank is currently priced as one of the cheapest in the private banking pack with p/b at 0.6. the target for cup with handle comes at 210. The results are due on 22/10/2022. The price could be expected by December 2022 as per price action

1 Like

HBLPOWER Daily Chart

HBL
Buying on Pull back - Fib levels

25% Qty Fib 1.0
25% Qty Fib 0.786
50% Qty Fib 0.618

Fundamental

Market Cap ₹ 3,035 Cr.
Current Price ₹ 110
Stock P/E 31.5
Book Value ₹ 31.2
Dividend Yield 0.37 %
ROCE 13.4 %
Sales growth -2.66 %
NPM 6.93 %
Profit growth 18.4% CAGR over last 5 years

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Bharat Forge >>>


The Company won new orders worth ~ Rs. 1,000 crs. across automotive and industrial segments. The new orders include a healthy mix of existing and new customers as well as traditional and new products.
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Sales growth and OP is increasing with the OPM from last 2 years. As well promotor and FII holding also increased.
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Let see how it will unfold from here …mahol to ban raha hai…!
for more details - The Defenders: Special Episode on Bharat Forge: Making Arms for India | 20 August, 2022 - YouTube

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RAILTEL Daily Chart

(a) Trendline break with higher volume
(b) Hidden Divergence: Lower swing on RSI, Higher low on price

Fundamental

Market Cap ₹ 3,622 Cr.
Current Price ₹ 113
Stock P/E 17.0
Dividend Yield 2.13 %
ROCE 19.5 %
NPM 13.5%
Sales growth 12.7 %

During Jul-Aug-Sep-2022, shareholding % increased for Domestic institute as well Foreign Institute

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MANYAVAR [Rs 1430] 1D Daily Chart

(a) Bearish Divergence: Higher top on Price candle, Lower top on RSI
(b) Double Top: Price attempting make another same level previous top, with weak candles, with weaker RSI

Chart’s bearish sign is at early stage, as HH-HL trend is still intact,
Confirmation on bearishness required, if price close below previous swing low 1380, coinciding with Pivot and 50EMA.

Contra view:
(a) There is a bullish view on the stock in this forum on 01-Oct at Rs 1408
(b) There is bullish view on the stock by Samir Arora on 06-June at Rs 1100

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Some updates post earnings - (In short, I am still holding all the consumption names)

IDFC First Bank, Monthly - Poised near the resistance that it can bound over this month. Any close for this month around or above 64 can point to more follow-up gains next year (breakout from post-merger trendline). Fundamentally, the results have been very good and the story is playing out. I think book value could get closer towards 48-50 levels in a couple of years or so by which time this can even trade at 3x book (All the metrics including the Cost-to-Income should be better by then) which leaves considerable returns for the future.

Metro Brands, Weekly - Around 820 levels should offer strong support which is about 64x TTM P/E. The numbers continue to be good with 47% topline growth and 42% bottomline growth YoY. QoQ isn’t comparable for footwear businesses due to seasonality as contribution varies from 22% to 27% depending on quarter (Lot more pronounced in Bata). Q3 numbers should be strong with the wedding season and the festive season. With the valuation comfort and prospect of earnings growth led by volume growth, I have left this untouched. Metro has done phenomenally well due to its target market being unaffected by inflation (Crocs continues stellar growth and the 3000+ range is where business is experiencing highest growth) - strong wage growth has compensated, which was the fundamental thesis of choosing these stocks in the first place.

Varun Beverages, Daily - Probably the best performer of the lot, along with IDFC First Bank. Seems to be resuming uptrend after 6 weeks of consolidation. The numbers have been phenomenal with strong volume growth for a seasonally weak quarter which has beaten summer quarter last year YoY. Getting Cheetos, Doritos, Lays business in Morocco could be an indicator for further in-roads into PepsiCo’s foods business that they don’t usually give out. This is probably now a BIMARU play as well with Bihar, Rajasthan, MP etc. contributing a lot to the growth. Despite the already high allocations (#1), I am always tempted to allocate more here - such has been the prospects and performance. With strong utility, cheap price points, smaller packs, I expect per capita beverage consumption to go up strongly and lead domestic consumption from the front.

Devyani, Weekly - Around 180-185 levels have been strong support and currently its trading around those levels (Also 20 WMA). Business performance has been very good here as well for a seasonally weak quarter with 45% topline growth and 21% bottomline growth (One off currency loss in Nigerian subsidiary skewing bottomline. EBITDA still highest ever across quarters, though this is a seasonally weak quarter). Store addition is the strongest with 88 stores added in the quarter which is the highest. I assumed the margin decrease was due to newly added stores but looks like there is gross margin compression as well due to inflation (confirmed in concall). Most of the RM prices from chicken, oil, gas prices though are moderating as per management so margins should come back. The topline is the highest ever which isn’t bad for a seasonally weak quarter. When margins come back, bottomline should shine as well (However tax rates might be 25% from next year)

While Metro and Devyani appear weak on the charts, so was the case with VBL and IDFC First after September and now they are the best performing, so have decided to exercise some patience since fundamentally numbers are good.

Manyavar is yet to announce results. N R Agarwal and HBL are coming soon. Haven’t seen a reason to sell any of these, so have held on as prospects are good.

Some new additions

Permanent Magnets, Weekly - Broke out of 1 year resistance, re-tested and formed a triangle from which it could be breaking out. Volumes are slim so good luck buying this. :slight_smile: The investor presentations of 2022 and 2021 and the AR offer great insights to the business. The numbers don’t seem as good as they should be due to reduction in gas meters contribution. However the contribution of EVs has been going up considerably and the vision of the business seems very promising (While they are also into current sensing and BMS, smart meters and similar space as Shivalik bi-metal, they seem like a slightly differentiated play)

Gufic, Weekly - Seems to be breaking out of the downward trendline on the weekly. I was interested in this fundamentally after going through the VP thread. Consumer focused branded pharma play, especially in the vanity space sounded like a good thing to me. Valuations weren’t demanding so took a position

Disc: Have positions in IDFC First, VBL, Devyani, Metro and Manyavar from early July or so. No trades since. Have positions in Permanent Magnets between 540-550 levels and Gufic from 220 levels. Not SEBI registered and none of this is advice. I write to make things clear to myself more than anything

40 Likes

SOUTHERN PETROCHEM, 1D Daily Chart [Rs 60.85] (spic.in)

Price stayed in small compression channel for a month long accumulation
It gave an fake upside break-out during the channel and price returned back to channel
It gave a fake downward break-out at the end of channel.
Price closed at very small doji daily candle below the channel.
Then with very high volume price made a break-out with a candle size 3x the channel.

Price closed above 200DMA

Safe to buy during pull-back when price attempt to retest 200DMA [Rs 58.8]

Fundamental

Market Cap ₹ 1,239 Cr.
Annual Sales ₹ 2219 Cr.
Current Price ₹ 60.8
EPS ₹ 12.3
Stock P/E 4.95
Dividend Yield 0.00 %
ROCE 23.3 %
Sales growth 4.58 %
NPM 8.74 %

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JBMA [Rs 417] 1D Daily Chart Home - JBM Group

Price staying in compressed zone for a month-long period

Attempted break out, but resulted in a failed Elephant bar [Oliver Velez]

Recent candle has again shown attempt going upward of channel

There is very slight improved RSI, but bullishness confirmation is missing

One candle of size Rs 15-18 with upper quadrant closure may confirm the upward trend resumption.

Contra view: Current price is almost 10% below 200 day moving average

Fundamental

Market Cap Rs 4928 Cr
TTM Sales Rs 3788 Cr

Company has announced quarterly result yesterday

YoY changes

Revenue from Operation +30%
Earnings per Share +40%

Stock PE 27
RoCE 13.5%

Elecon, Weekly - Had posted this chart earlier around 400 levels. It corrected from there on low volumes for 3 weeks and has since then started upmove, with this week likely going to be the breakout week. Numbers came in last week and they were exceptional. Last concall had hinted at good performance and expanding margins owing to operating leverage. Looks like that is playing out.

This quarter’s call is very bullish on the outlook for the business as well. Expanding margins, improving return ratios, good order book, debt gone to zero. Its a good play on Defence as well as Industrial capex (Steel, Power, Cement). Guidance - 1500 Cr for FY23 and 2000 Cr for FY24. Margins could be around 22% on this. It looks like higher energy costs abroad are driving business (could be more structural, long-term growth). Exports will be 50% by FY30 (Right now 10-12%).

Valuation is in favour considering the growth opportunity and structural tailwinds in the business and also net debt-free balance sheet.

Vimta, Monthly - Good triangle consolidation and a breakout post Q2 results and concall. Here as well the future looks very good considering its doing well in pharma, electronics and food testing as well with diagnostic business being the only drag. The NFL setup along with FSSAI (PPP partnership) at JNPT could start contributing to numbers in the second half. Here again future could hold good topline growth along with margin expansion. Valuations not very demanding considering the growth opportunities perhaps.

There’s also a long-term 4 year C&H formation on the monthly charts

Disc: Have positions in Elecon between 350-400, added more post results. Vimta between 400-450

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Recently took a position in Elecon Engineering:-

Thesis: Co can do 2000+ crores of rev in FY24 with expanding ROCE and sustaining Ebitda Margins at 22%. Moreover they have launched new products like Planetary Gears.

Similar thing played out in one of the other capital good companies where demand for cheaper products led to super normal exports growth. Can it play out in Elecon along with Navy orders coming in (expecting 300 crores+). Lets see

Technically: stock has broken out post results with high volumes and Relative strength vs the sector is greater. Part of satellite Portfolio.

Disclaimer: Make independent buy and selling decisions. Not a reco to buy or sell by any means.

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Equitas SFB:-

Post the fall- the trend has finally reversed and volumes are building. Testing the trend line resistance.

Fundamental thesis:

Credit cost will fall in H2 this year going by the stated guide and write backs can start from Q3 onwards. Given they run the CV business High PCR, taken write backs when the used CV gets sold. Could be used to beef up PCR. Lets see.

BVPS post merger will be at Rs41- not factored in any street estimates at the moment.

Guidance to grow AUM is at 25%+, H2 is seasonally stronger.

Only joker in the pack is to watch the asset quality like a Hawk. GNPA’s have started falling though.

Disc: own Equitas hold co, but track SFB as reverse merger can be completed at any time, given rbi & nclt approval is here. A case study for me as I bought the Hold co at 110 first and then averaged down in 80s and 90s. Given the value that emerged. Not a reco to buy or sell by any means.

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Midcap/Smallcap Weekly - We have had a good rally from July to Sept and the consolidation which looked like a setup for a breakout appears to be weakening. I thought some good numbers will help the breakout but even good numbers are getting sold into, unless there is a big earnings surprise. I am not sure what will help this breakout. The longer this sideways movement goes, more the probability of a breakdown out of sheer fatigue.

Disc: Booking profits and reducing exposure on trading positions. Selling bulk of the consumption names since I have very high allocations and good profits (nearly 25-30% on avg. since July), except VBL which I am unable to sell. I am thinking the weakness in smallcaps will give some opportunity so raising cash seems prudent. I might be wrong.

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Yes @phreakv6, I’m also observing similar…good results are getting sold into and weak ones are seeing big cracks. Have you experienced similar in past and how it goes after this?

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Since market gained a lot in October, probably smart money was booking profits ahead of the US CPI data yesterday. Let’s see whether markets will take a decisive direction after lower than the expected data and expectated lower future rate hikes by fed.

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In general when I have seen something like this, it means there’s a lot of expectations which aren’t being met and only surprises (like stellar growth even QoQ for eg.) are respected. Everyone is keen on booking profits. I have been a bit late but looks like there will be more chance today to reduce exposure on expensive names and look for fresh ideas over next few months.

If I remember right, when I went from 20% to 100% invested in July, it was just before earnings and pretty much every result that came out - from VBL to IDFC First to Devyani was cheered and there were very quick moves. That tells there’s no expectation in the price. Due to the big runup now, though the numbers have been equally good, there’s simply no respect.

This might just be temporary weakness and some of these names with high expectations could go through extended consolidation (for 3-6-12 months), similar to what Polymed went through or many of the names with big runup last year.

Global markets are rebounding bigtime post CPI numbers but I would prefer to stick to the stance until ATHs are made on the indices which isn’t much further away - If there is strength and sustenance above ATH and there are good stock setups, there will be sufficient time to scale up new positions. There are a lot of microcaps which have been punished and could make for good entries.

Disc: I will still hold these consumption names (Devyani, Metro, Manyavar) but at a normal allocation (~5%) than what I had (~15%). I am not pessimistic on these businesses in the long term. I still hold VBL for the growth there is stellar. I feel few microcaps like Vimta probably offer better risk:reward.

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GLENMARK 1W [Rs 430]

Fundamental

Market Cap ₹ 12,168 Cr.
TTM Sales ₹ 12,345 Cr.
Current Price ₹ 431
Stock P/E 12.7
Dividend Yield 0.59 %
ROCE 16.0 %

Rising quarterly OPM %
March-2022 15%
June-2022 16%
Sep-2022 18%

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Update on previously posted charts

KOPRAN Rs 171
After trendline break out, gained +10%, but rally got sold
With very weak quarterly result, and upper thrust from chart, price unlikely to recover back above trendline

HBLPOWER Rs 109.50
As seen in chart stock topped at 120 with weakening RSI
Lost -10%

RAILTEL Rs 112.80
After trendline break out, gained +20%
Current consolidation at 128 is co-inciding quarterly result
Unikely to go back to previous zone of 110-115

MANYAVAR [Rs 1430]
With bearish divergence, stock couldn’t stay above previous swing low 1380
Unikely to go back to previous zone of 1400+

SPIC (Rs 60.85)
Large candle broke out of consolidation
With low volume pull back near 200MA is a good buy for those who trade pull-back

JBMA[Rs 417]
Showing signs of coming out of consolidation, but going back to trading zone [405-420]
With quarterly result priced in, stock unlikely to go below zone

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