As the much discussed and debated general election is drawing to a close, anxiousness and trepidation seems to have overwhelmed decision making abilities (or inclinations) of investors. Only FIIs have kept their faith on the Indian market.
Trading volumes have shrunk, much to the distress of the broking community. Index movements have become range-bound. Interest has shifted to specific stocks that are either announcing good results or good news.
During results season, good news and bad news should be read between the lines. Some good results are due to low base effect or one-off gains. Likewise, bad results can be due to one-time write-offs or provisions necessitated by tax planning.
Please do your due diligence before investing. The stock market philosophy is ‘caveat emptor’ (‘let the buyer beware’).
City Union Bank
This bank stock had been struggling in a bear grip for a year before finally breaking out into bull territory in Apr ‘14. Announcement of RBI hiking the FII stake limit in the company caused the recent price spurt. MACD, RSI, Slow stochastic are looking overbought. ROC has corrected overbought conditions. Expect some correction or consolidation before the next up move.
The stock of Deepak Nitrite tested investor patience by being in a bull market for more than 18 months out of which 14 months were spent in a sideways consolidation. After breaking out upwards in Feb ‘14, the stock price has been moving up gradually. The recent high volume activity and price spurt followed announcement of a simultaneous bonus issue and stock split. All four technical indicators are looking overbought. The stock price has tripled in the past 8 months. Time for some correction or consolidation.
The stock of Kajaria Ceramics has been one of the best performers in the market, giving 5-bagger gains during the past 3 years. The recent high volume price spurt was after announcement of very good Q4 results. All four technical indicators are looking overbought. That doesn’t mean the stock can’t move higher. Some correction will improve the technical ‘health’ of the chart.
Shasun Pharma’s stock had formed a ‘double-top’ reversal pattern in end-2012 (not shown in chart) and dropped 75% from its peak of 185 to its Jun ‘13 low of 45. After a long struggle to extricate itself from a strong bear grip, the stock broke out into bull territory last month. The recent price spurt resulted from news of the company buying global rights of two drugs and stake buy by FIIs. Technical indicators are overbought. The stock price has more than doubled from its Mar 25 ‘14 low of 68.