PSU Banks: Out of the woods ....Part II

We continue our coverage on PSU Banks. PSU Index yet to cross crucial 3600-3700 level, but some PSU Banks are showing strength. SBI is range bound between 280 and 288 in last few days. If it manages to cross and stay above 292-295 supply zone, we may see some upward movement. Eventually PSU Bank Index will cross 3600-3700 as SBI enjoys 65% weightage in the Index.

We will examine technical setup for three relatively small PSU Banks namely Oriental Bank, Syndicate Bank and Andhra Bank. All three stocks are about to breakout from a bullish reversal formation.

Remember the oil Chinese proverb? One picture is worth a thousand words. Please find below three pictures (charts). Hope this will be equivalent to three thousand words.

Chart courtesy. in.investing.com

 Disclaimer - The views here expressed and the charts shared are strictly for educational purpose and not guideline for buy or sell. The author will not be responsible for any loss, that may occur.  

PSU Banks: Out of the woods

We have seen a clear distinct price differences between private and state owned banks. Bank Nifty is trading 4% above the 2015 high while Nifty PSU Bank Index is almost 20% lower than the high registered at same time. It is evident that out performance of Bank Nifty is due to phenomenal run of some private banks. 

This could be the time for PSU Banks to cover some of the lost ground. Chart of Nifty PSU Bank Index is suggesting that there could be some fireworks. Obviously that will come on valid breakout.

We will discuss current technical scenario of Nifty PSU Bank and some state owned banks. Nifty PSU Bank is now trading near to its breakout level 3600. Close above 3600 on weekly basis, if it happens, will occur after May 2015. Valid breakout may take PSU Banks much higher and there could be out performance of these banks comparing to private ones. 

According to theory, no formation, be it bullish or bearish, does not get complete until and unless valid breakout happens. 

Among individual banks, charts of State Bank of India, (SBI), Punjab National Bank (PNB) and Canara Bank are worth noticing. Please find the charts below,

292 is the level to watch for. Weekly close above this level will be considered bullish. Similarly, the level of 322 is important for Canara Bank. 

Technical evidences of PNB is slightly different. Here we have 165-170 supply zone. If PNB manages to close above this level on weekly basis, we can expect some fireworks.

All the stock discussed above are potential breakout candidate. We will keep the stocks in watch-list.

Disclaimer - The views here expressed and the charts shared are strictly for educational purpose and not guideline for buy or sell. The author will not be responsible for any loss, that may occur.  

Start of Bengali new year

This Monday, 17.04.17 is the first trading day of Bengali new year 1424. ......শুভ নববর্ষ .....

Last week witnessed lacklustre trading with mild bearish note. However software and metal stocks saw handsome fall. If we mention 4% fall in CNX Metal Index as profit booking, then the fall by same degree in CNX IT must be categorized as bear hammering. Bears should be thankful to yet another disappointing quarterly numbers from Infosys. Please find below last week's performance of major indices.











Bank Nifty has improved its position. In fact, Bank Nifty has been outperforming Nifty for last couple of years. Last week, no new development has taken place in this index. We hence focus on Nifty. There are certain technical evidences that are worth looking.

Nifty is in a strong uptrend for last 15 months. There has been mild corrections and last week was no exception. Now the question is whether this turns to be a major correction. Let us examine the probabilities.

Nifty has broken and closed below a two months old trendline. Till now this does not bear major significance as Nifty Future is still holding the trendline of the same period. In fact last close of Nifty Future is very near to the trendline support. Then we turn our attention to moving average.

Nifty never touched or closed below 22 EMA after crossing the same in last 15 months. Currently 22 EMA stands at 9130, just 20 points below the last close. If Nifty breaks 9130 decisively, then it may travel towards 9000.

Decisive break and close below 9000 will terminate this ongoing uptrend, since this is the last swing bottom. That should not be mistaken as downtrend. We need further confirmation for that.

Now whether Nifty dampens Bank Nifty or Bank Nifty uplifts Nifty will be clarified in next couple of weeks. Please remember divergence between Nifty and Bank Nifty can not last long. This we have seen in last several years. The mentioned divergence is against the overall logic of Indian stock market.  

Please find below the chart of Nifty.

Now after main course, its time for desserts. Sweets are integral part of Bengali new year celebration. Here we cover two stocks, both from ill-famed real estate sector.

First one is Prestige Estate. The stock is in verge of a breakout as per weekly bar chart. It is now attempting to surpass 225-235 supply zone. However, as per weekly line chart the stock is well above the breakout level of 218. Volume was supportive.

 

Prestige Estate never had the reputation of burning investors. Our second stock under consideration unfortunately has a history of doing so. We are talking about India Bulls Real Estate.

After making all time high of 850 on January 2008, India Bulls Real Estate sank to 81 in just 10 months. Next year, the stock floated till 300 only to plunge at 40 in 2011. The stock then started to consolidate between 40 and 110. Last week, the stock closed at 106, pretty near to the higher end of the range. As per monthly line chart, monthly close above 103 will be considered as breakout.

Technically speaking  crossover and stay above 110 may be a sign of re-rating. Recent buyback scheme seems behind the current positive sentiment. We do not know whether this sweet dish will turn sour but the stock is worth buying above 110 with appropriate stop loss.

Disclaimer - The views here expressed and the charts shared are strictly for educational purpose and not guideline for buy or sell. The author will not be responsible for any loss, that may occur. 

TCS: Soft price for software giant

Life is not that good for the software stocks following US decision on H1B visa. Infosys made a good reversal formation but price returned from the breakout level. The breakout level coincided with 200 DMA. Please refer to our earlier post named Infosys: Good times ahead.

Let us now focus on India's largest software company, Tata Consultancy Services or TCS. Here also, like Infosys, the crucial level coincides with 200 DMA. Unlike Infosys, TCS has formed bearish pattern. According to the pattern, TCS may fall to 2300 or even 2200 if it breaks and stays below 2390. The break needs to be accompanied by expanding volume.

Please note TCS will announce its Q4 nos on 18th April while Q4 results of Infosys will be out on 13th April.

The chart of TCS is given below.

Disclaimer - The views here expressed and the charts shared are strictly for educational purpose and not guideline for buy or sell. The author will not be responsible for any loss, that may occur.

Larsen & Toubro: Breakout!

Larsen & Toubro (L&T) is one of the few companies that maintains highest level of quality and integrity. This is a stock to own. L&T has been always favoured by the quality investors. Somehow, the stock was under performing the benchmark index for last 12 months. L&T is trading 12% below its all time high of 1893 at time when Nifty is trading well above the earlier all time high, which was registered 24 months back.

Now based on current technical evidences, L&T may well recover its lost ground. On 03.04.17, the stock has broken out from a bullish reversal pattern. In fact, two patterns are clearly visible on weekly chart. One is 'Cup & Handle' and the other is 'Ascending Triangle'. Both the patterns have same breakout level of 1615. The closes at 1661 on 03.04.17 with expanding volume. This being Monday, volume in attached weekly chart is misleading. We have still three trading days left in this week.

So whenever L&T closes above 1620 on weekly basis, it is bullish and will remain so as long as stays above this level.

The bullish reversal patterns are not clearly visible in daily chart, but they exist. Latest closing of 1661 is, in fact, 2.5 higher than the breakout level. So bullishness is in the air. The chart is given below...

Disclaimer - The views here expressed and the charts shared are strictly for educational purpose and not guideline for buy or sell. The author will not be responsible for any loss, that may occur.