Category: Your Money

Analysis: TCS

Today’s pick is [stockquote]TCS[/stockquote]. The stock has made a 29% since the 1020 levels of October 2011.

The up-trend since last year saw a tip-off near 1440 levels recently; this can act as a near-term resistance level for the stock. Although the stock has seen two major corrections in the last year, it is still trading above the near-term support of 1290 (long-term resistance) levels and above the long-term support of 1070 levels.

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Oscillators RSI and CMO are at currently at 52 and -6. At this mid-level RSI, the stock has still got around 20 points to reach oversold levels. The current CMO level is also not suggesting any imminent move.

The MACD line just penetrated the signal line from below and the histogram levels are on a rise as well. Both these signal are giving a slight signal of a short-term up-trend for the stock.

The GMMA chart currently is not saying anything. Both the long and short-term set of lines are running very close to each other. A departure from the current scenario, either up or down will decide upon the future of the stock.

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TCS’s average correlation of 0.50 with the Niftybees is positive but not very strong. At this level the movements of the stock will not be able to replicate the same magnitude as Niftybees. [stockquote]NIFTYBEES[/stockquote]

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TCS has a historical volatility in the range of 0.2 to 0.7. The current high volatility is a result of the EMKAY trades and it should not be a cause of concern.

Looking at these technicals, it appears that the stock is presently trendless. A short-term hold is suggested. The long-term outlook of the scrip will be decided by how long-term lines of GMMA unravel themselves in the coming days.

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Momentum and fades

There are two kinds of moves in the market: defined and undefined. The defined moves have a reason attached to them. It can be a news about the company, a new product launch, a good earning postings or a good news for the industry itself. The undefined moves are… well.. they are just undefined.These undefined moves happen usually because of their momentum. A series of up-days keep pushing the stock up everyday.

The stock rises until it has the momentum going on its side, and once it stops, this is how it falls.

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The trend can be your friend… until the momentum ends.

When you go chasing momentum, don’t forget your faithful friend: the trailing stop loss. Unlike the usual stop-loss that you might set while placing your trades, these stop losses are calculated using highs and lows of a defined period and keep your losses at a minimum based on the recent highs.These are best suited for momentum scrips since they are not set to a particular price, unlike the normal stop losses, and automatically locks-in a profit once the momentum fades.

So, next time you want to trade with a momentum stock, be sure to have a trailing stop loss in place. This will be useful not only in minimizing your losses, but also in securing the profits that you have made over the holding period if used properly.

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Analysis: INFY

Today’s pick is [stockquote]INFY[/stockquote]. Even though the stock has experienced a high of 3000 and a low of 2150 during the last 12 months, it is still trading at roughly the same price as it was a year ago.

The stock has seen two drastic gap downs over the last 7 months. The up-trend since mid-July saw a tip-off near 2600 levels which might act as a near-term resistance level.

Looking at the chart for the last 2 months, a head and shoulder top might seem to be in formation if the current up-trend stalls and take a turn around 2450 levels on higher volumes.

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Oscillators RSI and CMO are at currently at 39 and -30. At this level of RSI, the stock has still got around 15 points to reach oversold levels. The CMO will also take time to reach the oversold side. These technicals are not giving out any signal currently.

MACD line and signal line are closing in towards each other and histogram levels are dropping off as well. The behavior of histogram (a decreasing slope) can act as an early signal of the imminent short-term up-trend.

The GMMA chart for the long term signal is suggesting a change in direction (uptrend since July) for the scrip. The short term lines are moving up again suggesting an up-trend after the last fall. A penetration of the short term lines with good volumes can bring about the up-trend for the stock.

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Infosys’s average correlation of 0.53 with the Niftybees is positive but not very strong. At this level the movements of the stock will not be of the same magnitude as Niftybees. [stockquote]NIFTYBEES[/stockquote]

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Infosys has a historical volatility in the range of 0.2 to 0.6. The current volatility is is a result of the EMKAY trades and it should not be a cause of concern.

Looking at these technicals, it appears that the stock is presently nearing oversold territory. A short term buy would be a good idea but for the long term you might want to wait and watch until those long term lines of GMMA dis-entangle themselves to take a stand.

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Weekly Recap

NIFTY.2012-10-15.2012-10-19

The NIFTY ended on a negative tone, drifting down -0.52% for the week.
Biggest losers were ACC (-6.02%), DLF (-5.78%) and GAIL (-5.11%).
And the biggest winners were AXISBANK (+7.37%), ITC (+4.94%) and HCLTECH (+4.07%).
Decliners eclipsed advancers 28 vs 22
fii.2012-10-15.2012-10-19Gold: +0.03%, Banks: +1.94%. Infrastructure: -0.45%,
Net FII flows for the week: $138.48 mm (Equity) and $183.68 mm (Debt)
Net domestic institutional flows for the week: $80.80 mm (Equity) and $856.20 mm (Debt)

Daily news summaries are here.

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