Category: Your Money

Analysis: MPHASIS

Today’s pick is MPHASIS [stockquote]MPHASIS[/stockquote]. The stock had a real good start of the year with an uptrend till April, but it could not sustain the momentum and crashed to its trend-line to find support. Since then it has been in an up-trend finding constant support in the trend-line until recently, where it closed below the trend-line. In the last three months, the stock has moved – 6% vs. 5% of the Nifty’s.

MPHASIS technical analysis chart

Oscillators RSI and CMO are nearing over-sold territory.

The MACD line and the signal line are moving close to each other – directionless. Both long-term and short-term GMMA lines are seeing a constrained movement leading to an indecisive future for the stock. Short-term technical gave a 4×9 bullish signal for the stock last week.

MPHASIS Correlation Chart

MPHASIS’s average correlation with the Nifty is 0.30. The scrip will be not be replicating the movement of Nifty closely. [stockquote]NIFTYBEES[/stockquote]

MPHASIS Volatility chart

MPHASIS has a historical volatility in the range of 0.4 to 1.4. The scrip’s volatility currently is in the lower part of the range.

To conclude, given these technicals, the stock is a short-term HOLD. For the long-term we will take a stand based on how the long-term GMMA lines unravel themselves.

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Technical Analysis on VIX – Does it make sense?

You can view a chart of the VIX just as you can for any stock or index. Just go to the VIX page, add some moving averages, maybe even Bollinger Bands and RSI indicators and you are on your way. However, just because you can chart the VIX just like a stock, doesn’t mean you should actually read the chart just like a stock.

India VIX analysis

Charts for stocks and indices actually represent buying and selling over specific timeframes. Stocks gap up and down. Gaps get filled. Old resistance points can become new support levels, etc. However, VIX is not a stock. India VIX is a volatility index based on the NIFTY Index Option prices. From the best bid-ask prices of NIFTY Options contracts, a volatility figure (%) is calculated which indicates the expected market volatility over the next 30 calendar days. Hence, price points for the VIX doesn’t correspond to potential profits and losses of actual trades based on those levels. Support and resistance and trend lines and momentum effects all depend on the existence of buyers and sellers in the asset being analyzed. But you can’t trade VIX directly, so the VIX can never find “support” because no one previously bought VIX “shares” at that price level. VIX is, at best, an indicator of market expectation of volatility.

However, there are a few useful analysis you could run on VIX, given its tendency towards mean-reversion. Bollinger Bands and moving averages could help you gauge the band within which VIX is oscillating. Longer-term charts could help surface seasonal patterns. StockViz India VIX Charts are another tool in the arsenal for investors to help them make better decisions.

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Analysis: NIFTYBEES

Today’s pick is NIFTYBEES – the ETF that tracks the Nifty 50 Index. [stockquote]NIFTYBEES[/stockquote]. After an initial up-trend at the start of this year that lasted till the end of February, the index saw 40-point correction in May. After testing the support at Rs. 480, the ETF got back on its horse and has been trending upwards ever since. The ETF just experienced its 52-week high at Rs. 600 a week ago. In the last three months, the scrip is up 6%.

NIFTYBEES technical analysis chart

Oscillators RSI and CMO are in no man’s land suggesting no particular direction for the ETF.

The MACD line and the signal line are moving close to each other – indicating a lack of any particular direction. However, both long-term and short-term GMMA lines are well spread, giving a bullish sign for the ETF. Also, the 4×9 technical gave a bullish signal for the ETF last week.

NIFTYBEES volatility chart

NIFTYBEES has a historical volatility in the range of 0.2 to 0.35. The scrip’s volatility currently is in the lowest of the range.

To conclude, given these technicals, NIFTYBEES is a short-term BUY. Following the current trend in progress, the scrip is also a long term BUY with a resistance level close to Rs. 600.

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Weekly Recap

NIFTY technical analysis

The NIFTY ended on a negative tone, drifting down -0.56% for the week.
Biggest losers were JPASSOCIAT (-4.73%), CAIRN (-3.90%) and AMBUJACEM (-3.25%).
And the biggest winners were TATASTEEL (+8.49%), HINDALCO (+7.79%) and JINDALSTEL (+5.42%).fii.2012-12-17.2012-12-21
Advancers lead decliners 26 vs 24
Gold: -1.20%, Banks: -0.75%. Infrastructure: -2.12%,
Net FII flows for the week: $824.80 mm (Equity) and $68.43 mm (Debt)

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