Analysis: STER(SLT)

Today’s pick is STER STER 0.00 0.00 (0.00%). The stock started the year with a rush to Rs. 140 levels, and after peaking off, it started its descent. The stock found a support around Rs 90 levels. Since then the stock has tested the support many times. Also, the stock seems to have found resistance around Rs. 120, which was tested twice in December, and stock again plummeted to the support levels. In the last three months, the stock has moved +3% vs. +5% of the Nifty’s.

STER Technical analysis chart

Oscillator RSI and CMO are closing in towards the over-sold territory. The stock is trading in the lower end of a very large Bollinger band range giving bullish bias.

The MACD line and signal line are moving parallel to each other, unable to give any outlook. Stagnating histogram levels do suggest forthcoming trend reversal. Also, Long-term and short-term GMMA lines are running close to each other and are not giving out any directional bias.

STER Correlation chart

STER’s average correlation with the Nifty is +0.71 which is positive and strong. The scrip will be replicating movement of Nifty closely. NIFTYBEES 813.00 10.37 (1.29%)

STER Volatility chart

STER has a historical volatility in the range of 0.3 to 0.8. The scrip’s volatility is currently in the lower end of the range and hence not a concern for the traders.

Given these technicals, we suggest a short-term sell. For the long-term we suggest to take a call based upon its behavior around the support levels.

Analysis: STER (SLT)

Today’s pick is STER. STER 0.00 0.00 (0.00%). After an initial uptrend in Feb this year, the stock deflated through June and settled in a range-bound side-ways motion ever since its merger with Sesa Goa SESAGOA 0.00 0.00 (0.00%) was approved. However, it just saw a very iffy breakout of the resistance level (Rs. 115) in the last trading session. In the last three months, the stock moved 14% against 13% rise of Nifty’s.

stock

Oscillators RSI and CMO are at currently at 68 and 55 – in over-bought territory.

The MACD line is showing a sign of pull back accompanied with the stagnation of the histogram levels, a sign of imminent bearish move for the scrip.

A long-term prediction cannot be made given that the long-term (red) GMMA lines are moving very close to each other. However, the short-term lines (blue) are experiencing a pullback, suggesting a short-term bearish move.

cor

STER’s average correlation of 0.72 with the Nifty is positive and quite strong. The stock will be replicating the movements of Nifty pretty closely. NIFTYBEES 813.00 10.37 (1.29%)

vol

STER has a historical volatility in the range of 0.3 to 0.8. The scrip’s volatility is currently in the middle of the range, and is not a cause of concern for the traders.

Looking at these technicals the stock is short-term SELL. Over the longer-term, we suggest a HOLD for now, with a keen eye trained towards the Rs. 115 resistance level.

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Sunder’s List

The biggest news over the weekend was the merger between Sterlite and Sesa Goa. Sesa Goa will issue three shares for every five Sterlite shares to create a new company with share listings in India and New York. Vedanta owns about 55% of Sesa Goa and about a 58% direct and indirect stake in Sterlite. Following the completion of the merger, Vedanta will own 58.3% of Sesa Sterlite.The deal is forecast to reduce Vedanta’s debt to $3.75 billion from about $9.65 billion after Vedanta transfers $5.9 billion in debt accrued from the Cairn India purchase to Sesa Sterlite. (WSJ)

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