Amazon deals

Sunday, May 1, 2011

Which are the good stocks in the Consumer Durables sector?

The Consumer Durables index has been one of the better performers among the BSE Sectoral indices. That doesn’t mean all the stocks in the index are performing well. Some are struggling to get out of deep corrections. Some are in bear markets. Some have shrugged aside bear attacks and are in strong bull markets.

Just because a sector is performing well, it doesn’t make sense to buy several stocks from the sector. One has to pick and choose, and buy the best of the lot.

Bajaj Electricals

BajajElec_Apr2911

Bajaj Electricals started correcting from Oct ‘10, and dropped 45% from its peak of 347 to the Feb ‘11 low of 190. The subsequent rally broke above all three EMAs and the down trend line, pulled back to the 200 day EMA, and then rose to the resistance level of 296. It has slipped down to the support level of 266 and the rising 20 day EMA. The technical indicators are hinting at a further correction or consolidation. The stock seems to be completing a bullish cup-and-handle pattern. One can buy on a dip to the 50 day EMA or 200 day EMA, or on a break out above 296.

Blue Star

BlueStar_Apr2911

Blue Star’s correction started a month earlier – from Sep ‘10. The stock appears to have found a bottom and has broken above the down trend line, but has struggled to move above the 200 day EMA. It is technically in a bear market, and will remain so till it can break above its long-term moving average. Avoid.

Gitanjali Gems

GItanjaliGems_Apr2911

Gitanjali Gems dropped a huge 60% from its peak of 395 in Nov ‘10 to 156 in Jan ‘11, and spent several trading sessions below its 200 day EMA but the ‘death cross’ confirmation of a bear market did not occur. The stock broke above its down trend line in Mar ‘11 and is technically back in a bull market. That means dips can be used to add.

Rajesh Exports

RajeshExp_Apr2911

A very interesting technical pattern has developed in Rajesh Exports. It reached a top of 142 in Nov ‘10, and then a slightly higher top of 145 in Jan ‘11. This would have been treated as a bearish double-top. But note that the slightly higher second top was part of a head-and-shoulders reversal pattern, with its neckline at 129. The sharp sell-off may take the stock down to the 75-80 level, where it is expected to find some support. The stock also had a sharp correction during May-Jun ‘10. Such volatile stocks are best avoided.

Titan Industries

TitanInd_Apr2911

What can one say about a stock which has not only been the darling of the sector, but also of the entire stock market? Titan fell 30% to its 200 day EMA in Feb ‘11, but did not close below its long-term moving average even for a day. It stopped short of testing its top of 4244 touched in Nov ‘10. Negative divergences in all four technical indicators – which made lower tops while the stock moved higher – may cause a dip to the 50 day EMA. Whenever you have a little spare cash, buy a few Titan shares – instead of trying to find the next mythical multibagger.

Videocon

Videocon_Apr2911

Any company that adds a ‘con’ in its own name probably won’t hesitate to con the investing public. Though Videocon has broken above the down trend line, it is trading below its falling 200 day EMA and remains in a bear market. Avoid.

VIP Industries

VIPInd_Apr2911

VIP Industries has given excellent returns to its shareholders and has been a star performer in the sector. Though the stock corrected 43% from its Oct ‘10 peak of 800, it spent only 2 days below the 200 day EMA before resuming its up move. Negative divergences in all four technical indicators have stalled the rally. The stock is in a bull market, and dips can be used to add.

Whirlpool

Whirlpool_Apr2911

Whirlpool performed very well businesswise and stock price wise. But a rounding-top bearish pattern dropped the stock 40% from the peak of 337 (in Oct ‘10) to a trough of 200 (in Feb ‘11) – well below its 200 day EMA. A smart rally took the stock back into a bull market, where it made heavy weather of crossing its down trend line. A dip to the 50 day EMA or 200 day EMA can be an opportunity to add. 

7 comments:

VJ said...

Great Post !!

As always your posts are rare but a delight to read.

Subhankar said...

Thanks, Vijay.

If you mean this is one of my 'rare' posts from the quality point of view - I accept your compliment humbly.

But my posts are definitely not 'rare' quantity-wise! ;-)

VJ said...

Subhankar,

Titan has made all time high today!! What are the technicals saying? Is the divergence still there?

I have heard some Technical Analysts (Talking heads on TV)giving negative views on Titan even as it was making moves towards all time high.

Fundamentally stock has lot of positives (Strong consistent growth, High ROCE/ROE, Negative working capital in Jewellery business, Inclusion in MSCI Index et all..)

Subhankar said...

The earlier negative divergences led to the expected drop to the 50 day EMA. The divergences still exist, plus the RSI is looking overbought. A drop to the 20 day EMA is likely, and can be used to add.

Chaitanya said...

Wow!! great site Subhankar. Excellent analysis of really good companies. Appreciate your efforts. What's ur take on Whirlpool, Titan and VIP now? Seems to have corrected a bit. Is it good time to accumulate or wait for further correction?

rgds
Chaitanya

Chaitanya said...

Hi Subhankar,
Any views on Hindalco?
kind rgds
Chaitanya Inya

Subhankar said...

Thanks for your comments, Chaitanya.

Whirlpool can fall to 130. VIP has strong support at 60. Titan has support at 140. All three are in bear markets, and can fall a lot lower.

Hindalco has a support zone between 106 and 112, but can fall to double digits.