Some Good Steals...

Be back later, Madhura.

hi AMITBE,
How is escorts and gnfc looking? It was hammered a lot in past two days. Can I enter the same on monday?
Thanks
Usha

Hi Madhura...seems to me GHCL had begun to dip after the long climb from 63 to 122 a couple of days before the start of the present correction. It had met with resistance at 123-127 and then fallen off.
Theoratically speaking, it may have a clear run to 115 from the 100 close tonight with a hiccup at 105...and may possibly go on to retest 124 off again.
As I have said, this is from the charts alone, and not a call for entry. The market conditions would not allow me to call anything just yet.
Regards.

Hi Usha...While Escorts is just about hanging above a support at the current 93.45 where a drop may be arrested, it has some difficult levels ahead at 95-97-98-101 to take it to 106-108 where the next lot of density lies. It may clear all these in a few quick sessions, but I'm not too drawn to the chart at this time.
GNFC was finding it difficult to clear 105-108 after several attempts ove the last couple of months. Now again a couple of days before the correction it was there doing the same without success and slipping.
At 90 off close tonight, it is tucked behind some resistance area at 93-94-96 and all the way back to 108.
A lot of the scrips that have been beaten down from higher levels may attempt a retrace back up again and may or may not stick at old resistances, having taken them out recently. Even so, there is something to be said for public memory, and those levels may stick again.
Further, after the recent chaos, the small and midcaps may find the going far less easy than the runaway rallies of the recent past.
Hope this helps.
Regards.

Hi Amit and others,

How does ITC look in the charts?

The price after the split & bonus and also the fundamentals of the company look attractive and inviting. But is this the right point of entry or is there a room for downside due to the market sentiment also the stock has run up for quite sometime now...

Looking for ur views on thi scrip.

Tks,
Sam.

Hi Sam...you have pretty much answered your query.
If you are looking at it from an investement angle, yes the growth story is great, the product bouquet awesome, the plans ahead aggresive and it's a leading player of the sector.
The stock split as a great maneuver has placed this blue chip within the reach of the most modest of players.
Yet it's a difficult call on ITC in the short run.
Being in the midst of a strong momentum, it may run higher still regadless of the market, in the short term. The pre split value at the cmp would be rather high I would think. So here the stock split/bonus may turn out to be a move of great marketing finesse indeed, and seeking higher levels on the back of the momentum in the short term is a distinct possibility.
Imagine here the high prices of the pre split rather than 137, and the probability of a further rise decreases significantly. And not to discount the players' savvy, there may be an abrupt slowdown to the upside, again, regardless of the market trend.
This is the reason I have said it's a difficult call.
As an investment, ITC is a clear winner in the mid to long term, no ambiguity whatsoever.
For a trade, we are back to the discussion above.
If I were to suggest an entry, a pullback to 125-129 would be to die for. Strong support here. 137-142 may give resistance. Past this, looking at the past data, the climb from 150-155-160-165-170 is likely to be quite tedious. Past 175, a quick upside to 195 is likely.
As a trade, again in my personal view, the call is difficult. As an investment, it's a great play.
If you track this, do keep me updated please.
Regards.

Hi sjoshi, There is a discussion on ITC in the previous post, do read it.
SAIL was amongst the counters which did not seek a higher level in the relief rally on Friday after the slaughter on Thursday.
At 62 off it is in some good support zone and a downside may slide it to 59 off below which the fall could be steep, though quite unlikely.
To the up, it has density to wade through 64 to 66. It is the least trending of the leading index counters and has been range bound for a long time and meets with a lot of resistance in the 65-70 zone.
Unless you trade swiftly intraday in either direction, I don't see a lot of virtue here in the short term.
A long term defensive investment could be considered though. It's a giant in the steel sector, and will go a decent way...in the long term.
Regards.

Amit,

I see that India Cements is extremely overbrought even after the market correction (MFI close to 70). Do you intend to hang on to it at these levels or is it better sell (if in profit) and to re-enter on new lows? My estimates are that it will come back to the low 90's in the next couple of sessions.

Your advise will help valdating my thoughts.

thanks
Kishore

Hi Kishore, thanks for the input.
As far as I can see, the chances of India Cements dipping to low 90s are low. 92 forms a strong support which has not been tested in more than a month. This time factor is by no means a definitive indicator, but certainly an important one. Above 92, 95 forms the next support, and this has withstood some pretty savage battering on a few occasions including on Thursday last.
In the wider picture, the market as a whole has been in an extreme over bought zone consistently over a longish spell, and this has been rectified only in the last two or three sessions.
You have used MFI (Money Flow Index), which is good enough, but in this instance it may be considered a rather rigid indicator.
The main difference between this and RSI (Relative Strength Index) which I would use here, is that MFI is volume weighted. India Cements is a very liquid counter consistently, and taking readings from MFI alone may tend to mislead the analysis.
Also, there have been a few bulk deals here in the recent past. Given that high volume single trades are more significant than numerous smaller trades, the Money Flow Index would reflect this, comparing today's average price with yesterday's, weighing the average price by volume.
The MFI is a momentum indicator that is similar to the RSI in both interpretation and calculation. However, MFI being volume weighted, we may want to look at other aspects of a scrip while analysing it.
India Cements has all the makings of a bullish counter. The resilience to battering and continued high liquidity are sound indicators of this. When in the trend, it has been pressing against all its resistance levels, trading in a very narrow band with high volume, giving further evidence of the strong bullish under-current.
At this point, closing at 102.50 after a high of at 105 on Friday, it is certainly at a good and balanced zone on the RSI, which appears to give a buy signal.
Should the market remain stable, and nothing changes on the fundamentals of IndCem, I expect it to test higher levels.
There are some resistances right above here at 96-99-105-111, but it has broken past these in the recent past, some on more than one or two occasions.
Regards.

Hi Amit,

Many thanks for your detailed inputs. Your analysis helped me look at the stock differently (with a more positive outlook). I was naive to overlook recent spate in volumes to apply MFI.

I went back into the charts and applied the Stoch Oscillator which gives a 'Buy' signal for Ind Cem at present levels. In fact it also indicates a bull run on the stock for over a year.

You are absolutely correct about the volume indicators. In fact the volume of 18.57 Crs on 16th Sept will provide the stock the assistance for a renewed upside (atleast till 115).

Will get in early tomorrow.

On a separate note, I feel there is an opportunity in Yes Bank. Have a look at it and let me know if we are into something here.

Warm regards
Kishore