Category: Your Money

Analysis: RCOM

Today’s pick is RCOM [stockquote]RCOM[/stockquote]. The stock started the year with a very quick up-move which experienced resistance around Rs. 110 levels in Feburary. After a head-and-shoulder top formation, the stock started its down-ward movement to see a bottom of Rs. 50 by September. Since then, the stock has been on an up-move. In the last three months, the stock has moved +54% vs. +7% of the Nifty’s.

RCOM technical analysis chart

Oscillators RSI and CMO are hovering close to the over-bought territory and are suggesting a short-term bearish price action. The stock is close to the upper Bollinger band, which is suggesting a bearish move for the stock as well.

The MACD line and signal line are moving very close to each other unable to suggest any short-term direction. Long-term and short-term GMMA lines are well dispersed and are pointing towards a bullish long-term direction for the scrip.

RCOM correlation chart

RCOM’s average correlation with the Nifty is 0.62 is positive and strong. The scrip will be closely replicating the movement of Nifty. [stockquote]NIFTYBEES[/stockquote]

RCOM volatility chart

RCOM has a historical volatility in the range of 0.4 to 1.0. The scrip’s volatility is currently in the middle of the range.

Given these technicals, we suggest a short-term Sell owing to the little divergence of price with momentum oscillator. A longer term Buy is suggested attributing to the well spread out GMMA lines and current up-trend. However, we suggest having trailing stop-losses in place, in case trend-reversal were to take place.

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Preetam’s List

Market Roundup: Dow +0.49% to 13779. S&P +0.15% to 1495. Gold -0.17% to $1683. London +0.30%. Germany +0.15%. France -0.40%.

Bharti Airtel Ltd [stockquote]BHARTIARTL[/stockquote] India’s biggest phone company, and No. 4 Idea Cellular Ltd [stockquote]IDEA[/stockquote] on Wednesday reduced the discounts and freebies on offer to customers in telecom zones across the country, effectively raising calling costs for mobile phone users. Vodafone India Ltd, the second biggest mobile phone operator, is expected to follow suit. Will this be sufficient to deliver a significant enough boost to the revenue of the telcos that are hurting because of increased costs, competition and spending on spectrum. (MINT)

SEBI has notified norms that make it mandatory for investment advisers to register with the capital market regulator and also require them to disclose all issues that could result in conflict of interests, among others. Investment advisers also have to disclose the fee received for their advice on a particular financial product. Does this mean we will get better advise? (ET)

Inflation notes have handed investors a 0.5 percent loss since the end of October, versus a 0.2 percent decline for the broader market, according to Bank of America Merrill Lynch indexes. The International Monetary Fund cut its 2013 growth outlook for the U.S. yesterday and the House of Representatives voted to temporarily suspend the nation’s borrowing limit. Treasury Inflation Protected Securities are lagging behind conventional U.S. government debt for a third month before the U.S. sells $15 billion of TIPS today. (Bloomberg)

Late Tuesday, the central bank allowed exporters to access the foreign exchange market without having to first exhaust funds in their foreign currency accounts, reversing a previous restriction imposed when the rupee was plummeting to life lows. The rupee swayed in two-way trade on Wednesday before settling higher, helped by gains in euro and foreign fund related selling. (ET)

Good luck!

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Analysis: CUMMINSIND

Today’s pick is CUMMINSIND [stockquote]CUMMINSIND[/stockquote]. The stock started the year with a very quick up-move which experienced resistance around Rs. 500 levels. After many trials to break free, the stock traced down 20% to find the trend-line for support in June. Since then, the stock has been on an up-move and has seen a constant support from the trend-line. It saw its 52 weeks high of Rs. 542 in end December. In the last three months, the stock has moved -5% vs. +6% of the Nifty’s.

CUMMINSIND technical analysis chart

Oscillators RSI and CMO are nearing the over-sold territory and are suggesting a short-term bullish price action. The stock is close to the lower Bollinger band, which is suggesting a bullish move for the stock as well.

The MACD line and signal line are moving very close to each other unable to suggest any short-term direction, although the stagnating histograms level are suggesting a trend reversal. Long-term and short-term GMMA lines are very close to each other and are not able to point at the direction of stock movement.

CUMMINSIND correlation chart

CUMMINSIND’s average correlation with the Nifty is 0.49 is positive. The scrip will be replicating the movement of Nifty. [stockquote]NIFTYBEES[/stockquote]

CUMMINSIND volatility chart

CUMMINSIND has a historical volatility in the range of 0.4 to 1.0. The scrip’s volatility however is currently in the lower end of the range.

Given these technicals, we suggest a short-term Buy. A longer term watch is suggested, a call could be taken on the basis of spreading out of GMMA lines. To manage your risks we suggest having trailing stop-losses in case trend-reversal were to take place.

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Market Roundup: Dow +0.46% to 13712. S&P +0.44% to 1493. Gold +0.09% to $1693. London -0.03%. Germany -0.68%. France -0.59%.

FIIs began playing an interesting derivatives strategy called ‘covered call and protective put’ last week. They initiated the strategy when Nifty futures traded around 6050-6070, hoping the index would rise to 6100 or slightly above that level till the RBI’s policy declaration on January 29. The markets have priced in a 25-basis points cut, but analysts say indices could correct by 5-7% if the central bank does not cut rates. (ET)

Faced with weak revenue and a rising budget deficit, the government hopes to raise as much as $5.5 billion selling equity in seven state companies before the end of March. It plans to offer a 10% stake in Oil India [stockquote]OIL[/stockquote]valued at about $600 million, 9.5% of power producer NTPC Ltd [stockquote]NTPC[/stockquote]. for about $2.3 billion, and 9.33% of MMTC Ltd.[stockquote]MMTC[/stockquote], India’s largest gold importer, for about $1 billion. (WSJ)

When the Jet Airways [stockquote]JETAIRWAYS[/stockquote] and ETIHAD are at the brink of a collaboration, Indian budget carrier IndiGo is in talks for an alliance with U.K. carrier British Airways. An operating alliance with an international carrier could give the carrier partial access to international destinations in Europe, without adding to its costs. . (WSJ)

Stock markets are supposed to reflect market sentiment. Typically, a buoyant stock market means there are strong proclivities towards growth. But the 2012 picture is quite different going by what has happened around the globe. Global conditions have been weak with uncertain future signals – fiscal cliff, the possible collapse of the Euro zone, stagnation in India and a downturn in China. Here is a take on why it happened? (ET)

Japan shares declined, with the Nikkei (NKY) headed for its first three-day decline since elections were called, as the yen climbed after the Bank of Japan said it will wait a year to add open-ended stimulus. In addition, Japan’s central bank yesterday agreed to set a 2 percent inflation target urged by Prime Minister Shinzo Abe. (Bloomberg)

 

All the best!

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Analysis: CAIRN

Today’s pick is CAIRN [stockquote]CAIRN[/stockquote]. The stock started the year with a rush to Rs. 400. The momentum exhausted and left the stock plunging to Rs. 300 levels by May. The stock tested this support level quite many times since then and has just started moving up after breaking out of the pennant in late December. In the last three months, the stock has not moved at all vs. +6% move of the Nifty’s.

CAIRN technical analysis chart

Oscillators RSI and CMO are close to the over-bought territory but are not showing any bias.

The MACD line and signal line are moving very close to each other unable to suggest any short-term direction. Although decreasing histogram levels are pointing to an imminent short-term bearish move. Long-term and short-term GMMA lines are very close to each other and are not able to point at the direction of stock movement.

CAIRN correlation chart

CAIRN’s average correlation with the Nifty is 0.49 is positive. The scrip will be replicating the movement of Nifty. [stockquote]NIFTYBEES[/stockquote]

CAIRN volaitility chart

CAIRN has a historical volatility in the range of 0.2 to 0.6. The scrip’s volatility however is currently in the lower end of the range and hence should not be a concern to the traders.

Life insurance corporation of India bought Rs 1,291 Crore worth of shares on 3rd Jan in an insider trade instance.

Given these technicals, we suggest a short-term Hold. A Long-term call could be taken once the GMMA lines start to spread and give out a positive cue. It will be beneficial to have trailing stop-losses in place, in order to book profits if a trend-reversal were to take place.

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