Kotak Mahindra Bank on daily chart, stock price at Rs. 806.90 has given the breakout of the ascending triangle pattern at Rs. 786 Level, indicate on going bullish rally will continue into the stock price which will take is towards Rs. 862 level. Tracking Bollinger Band on daily chart, stock price is ridding the upper Bollinger Band, also the band is widening. Momentum oscillator RSI is rising have more room left on upside, MACD on weekly chart is on the verge to give positive crossover which add more bullishness for the stock price.

If one were to go by the volume data, a higher upswing is seen on the stock price. Trader or investor can accumulate for the target of Rs.860/895 level, with Rs. 786 stop loss on closing basis.

This company is one of the largest in India and third in the world for producers of Phthalic Anhydride, which is used for the production of flexible PVC, UPR, Plasticizers, varnish, textiles dyes, and paints. The company we are talking is IG Petrochemicals.  The company is likely to show better price performance in near term supported by good fundamentals and technical breakout.

On chart, stock prices are volatile. The stock hit 52-week high of Rs. 174.50 in August 2015, then price revered to 52 weeks’ low of Rs. 75.20, in the month of February 2016, down by 56.90 percent from its 52-week high. Currently, stock price is trading at Rs. 176.85, made a 52 weeks’ high at Rs. 183.85. The stock price witnessed 135 percent rise in the last six months, from the 52-week low. We feel that there is still some steam left and the rally is likely to continue.

Technically on daily chart, stock price at. Rs. 176..85 has given a breakout of rounding pattern at Rs. 168 level, and it’s moving towards northward direction, indicate ongoing bullish rally will continue in the stock price. Applying other indicator on the chart like Bollinger Band (BB) we find stock price at Rs. 176.85 is ridding the ‘Upper Bollinger Band’ and also the bands are widening, thus indicating positive momentum.

The technical indicators over different time scales – on a daily weekly and monthly chart – point towards a clear relative strength index (RSI), which indicates inherent strength. It has more room upside, which adds further positivity to the index. On a monthly chart we spotted positive crossover in moving average convergence divergence or MACD (a momentum and trend indicator) also suggest the formation of the next big move up in the stock over the next few months. Most of the oscillator based indicators also point towards the bullish view of the stock price.

Looking towards the chart pattern and study i.e. Bollinger Band, RSI and MACD, we believe stock price may extend its rally towards Rs. 206/224 levels, whereas Rs. 166 will act as a strong support level on closing basis.

In my past blog I had written about how to play the volatility in the markets. I had clearly mentioned that, the stocks are subject to market fluctuations in terms of prices and Investors should be interested in the possibilities of profiting from these pendulum swings. In that blog I stressed on how it is impossible to time the market and hence one should focus on pricing the market rather than timing it. However there are certain factors that some time indicates towards few signals that may help us in avoiding some mistakes.

When we talk about the timing the markets it means buying low and selling high. However timing the markets is impossible and it only happens in stories (Usually told by few people who try to lure the gullible retail investor). However there are certain factors which indicate towards the fact that markets are peaking out and hence one can get cautious while investing at those levels.

There are certain characters indicating that markets are heating up. The following are certain broad parameters.

Let’s try to get some idea on this

Historically High Levels

 By historically high Levels I mean, when markets are breaking new all-time high levels almost every day. The Same way it had happened in 2008, when the markets were scaling new highs and making historical highs almost every alternate day.  While the earnings were not increasing markets were scaling new highs, only resulting into expansion of Price Earnings and not the earning per share.

This leads to the second factor. High Price Earnings Ratios

High Price Earnings Ratios

Just to provide an example for the above statement, in 2008 the markets were scaling new highs but the earnings of India Inc remained stagnant clearly resulting in to high P/E ratio. When market first times touched the 21000 level on 9^th January 2008, the Sensex was trading at 28.57x.  Similarly on 5^th November 2010 when the markets again touched 21000 mark, The P/E Stood at 24.15x.  This clearly indicated towards one factor that, when markets are peaking one should keep the track of P/ E levels.

Low Dividend Yield

 Dividend is one income which is not taxable and hence many investors look for dividend yielding stock. However when the markets heat-up, the dividend yield ((Dividend per Share/Current Market Price)*100) tend to be lower. Naturally when the prices of scrips are up the dividend yield will surely decline. And when dividend is lower than the bond yields, it is clear sign that markets are trading at higher levels.

Much Speculation on Margin

Usually trading volumes in the markets spurt up when the markets are on high. The volumes are high and investors (as they call themselves) trade high even on margin money. I have seen many people investing in markets by even by borrowing. So whenever we see high margin trading happening in the markets, it is time to get cautious.  Usually the derivatives markets witness such trading with higher volumes. But one should understand that, Derivative markets are hedging tools and not for speculation.

Poor Quality IPOs

Usually the promoters who want to tap the primary markets try to take advantage of bull markets. So that they get better prices for stake they are selling in the markets. Hence whenever the markets are peaking, we get flood of IPOs.  Just to quote “The IPO are floated in favorable time, but time favorable for sellers and not the buyers”. The poor quality IPOs usually hit the primary market floor when the markets are at peak and try to get better valuation. Further gone are days when investors used to get amazing returns from IPOs. While analyzing the IPOs, I have come across funny kind of IPO objectives.  While one Company wanted to Pay-off debts, one wanted to invest in subsidiaries. So whenever we get flood of poor quality IPOs, it is time to get cautious.   

Asian paints on a daily chart stock price at Rs.1146.20 is trading in a perfect parallel channel, starting from March 2016, in the channel stock price has touch the upper channel and lower channel twice, now stock price is heading towards north to touch the upper channel of parallel channel, indicate positive outlook for the stock price. Momentum oscillator RSI is rising have more room left on upside, which add more bullishness for the stock price.

If one were to go by the volume data, a higher upswing is seen on the stock price. Trader or investor can accumulate for the target of Rs.1213/1240 level, with Rs. 1105 stop loss on closing basis.

Mahindra & Mahindra Financial Services on a daily chart stock price at Rs. 347.75 has given a breakout at Rs. 339 of symmetrical triangle pattern, indicate stock price will continue towards north. Also stock price is trading in a parallel channel, in the channel stock price is heading towards upper trend line of channel. Momentum oscillator MACD has given positive crossover, which also add more bullishness for the stock price.

If one were to go by the volume data, a higher upswing is seen on the stock price. Trader or investor can accumulate for the target of  Rs.363/374 level, with Rs. 342 stop loss on closing basis.

Market commentary: MCX Gold

As we suggested last week that we might see correction towards 30800-30500 and we witnessed the same. Last week MCX Gold Oct fall 300 points currently trading at 30900 indicate this fall can continue towards 30500. Technically MCX Gold on daily chart, trading within the parallel channel, started form October 2015, in the channel Gold price has touch the upper channel trice and lower channel twice. Now Gold price is heading towards lower channel of parallel channel, indicate uptrend is intact, Gold price can continue the profit booking, which will take it towards 30500 level.

 On an intraday hourly chart, gold is trading in a southward direction any trade or closed below 30500, we might see gap filling towards 29800, where one can use as an opportunity to buy Gold.  Momentum oscillator MACD on daily chart has given negative crossover, which add more bearishness for the Gold price.

Looking towards chart study, we suggested Gold price can see some correction towards 30500, any closed below 30500, Gold price can fall another 700 points, where one can use as an opportunity to buy Gold.

Pivot Level.

Gold Future: Positional & Intraday guidance

For intraday traders (MCX Gold) try to do jobbing on both the sides of market movement. You can use the levels given below to trade accordingly.

IPCA Laboratories on a daily chart we witnessed stock price fell more than 50 percent from its 52week high. Currently stock price is trading at 544 level. Yesterday stock has given the breakout of the range, which was trading in a range from last 5 months, indicate positive outlook for the stock price. Also stock is trading in a perfect parallel channel, in the channel price recently touch the lower channel now its heading towards upper channel. Any closed above the channel stock price can rally for another 20 percent.

Momentum oscillator MACD is on the verge to give positive crossover, which add more bullishness for the stock price.

If one were to go by the volume data, a higher upswing is seen on the stock price. Trader or investor can accumulate for the target of Rs.603 level, with Rs. 524 stop loss on closing basis.

In Indian equity markets everyone knows about the two wheeler manufacturer Hero MotoCorp. However hardly anyone knows about the kind to wealth it has generated for its shareholders. If someone had invested in 100 shares of Hero MotoCorp (then Hero Honda) in 1996, he would have generated returns at a CAGR of 28.31 percent over the 20 years period. Rather the investors would have earned more than 15 times (yes you read it right, Times) of the invested amount in just dividend receipts. The person till date would have received a dividend to the tune of Rs 478970 crore. And if we talk about the capital appreciation, the meagre amount of Rs 29, 000 would now has appreciated to Rs 33, 11,000. This clearly shows the power of compounding equity markets provide if someone has patience. Following table clearly shows the kind of dividend receipts investors would have gathered over the twenty years.