Analysis: NILKAMAL

Sometimes, fundamental analysis and technical analysis will be at odds with each other. Nilkamal [stockquote]NILKAMAL[/stockquote] is a case in point.

NILKAMAL Technical Analylsis Chart

Looking at its long term chart, one could argue that there is a slight uptrend. It seems like the stock tested the trend a few times and managed to hang on to it. However, is it the best possible bet amongst all other stocks you could possibly invest in? Lets see what Globe Capital has to say about it:

  1. Dominant player with a market share of ~40%
  2. Wide distribution network
  3. Holds market leadership in material handling equipment business (MHEB)
  4. Promising industry outlook

NILKAMAL earningsOf these, only #3 and #4 are about the future of the company, #1 and #2 are probably already priced in. However, without knowing how much of its revenue and profitability is derived from MHEB, it is impossible to take a call based it.

To its credit, Nilkamal has tried to get out of the commodity plastic furniture business through its @home brand. However, with an operating profit of Rs. 34.39 crores on net sales of 380.47 crores (9% margin), I think it deserves the ~5 PE it is trading at.

NILKAMAL technical analysis chart

Short-term technicals don’t hold out much hope either. Even though RSI is at over sold levels, MACD and Abhishek’s favorite Guppy Lines are not showing any upside.

To summarize: Avoid Nilkamal. There are bigger fish in the sea.

Abhishek will be back on Friday with his Technical Analysis posts.

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Analysis: HATHWAY

Today’s pick is HATHWAY [stockquote]HATHWAY[/stockquote]. The stock has been on an uptrend since the starting of the year. It saw its 52 week high of Rs. 306 in December and since then has been undergoing a flag formation. In the last three months, the stock has moved +11% vs. +8% of the Nifty’s.

HATHWAY technical analysis chart

Oscillators RSI and CMO are hovering close to over-sold territory suggesting an imminent bullish move for the stock. The stock is trading in the lower end of Bollinger band directing stock towards a bullish move. Although, short-term technical just saw 9×4 bearish cross-over.

The MACD line and signal line are moving very close to each other and hence are unable to suggest any short-term direction. Long-term GMMA lines are fanning out from each other and hence are giving a bullish bias for the stock.

HATHWAY correlation chart

HATHWAY’s average correlation with the Nifty is 0.07 which is positive. The scrip will be not be replicating movement of Nifty. [stockquote]NIFTYBEES[/stockquote]

HATHWAY volatility chartGlobe Capital - Hathway

HATHWAY has a historical volatility in the range of 0.6 to 1.4. The scrip’s volatility is currently in the lower end of the range.

From a fundamental point of view, Globe Capital has a BUY on HATHWAY. They expect that the company will be in a better position to capture the growth opportunity led by the structural changes in cable distribution and implementation of digitization.

Given these technicals, we suggest a short-term BUY. Although, a longer term call in any direction could be taken once a decisive breakout from the current flag takes place.  Also, we suggest having trailing stop-losses in case trend-reversal were to take place.

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Analysis: ICICIBANK (IBN)

Today’s pick is ICICIBANK [stockquote]ICICIBANK[/stockquote]. The stock started the year with an uptrend to see Rs. 1,000 levels in February, but lost its mojo to find support at Rs. 800 levels by June. Since then the stock again started its up-move and saw its 52 weeks high of Rs. 1,200 a couple of weeks ago. In the last three months, the stock has moved +12% vs. +7% of the Nifty’s.

ICICIBANK technical analysis chart

Oscillators RSI and CMO are hovering in no man’s land and hence are not suggesting any direction. The stock is trading in the middle of its Bollinger band. Short-term technical just saw 18×4 and 18×9 bearish cross-over.

The MACD line and signal line are moving away from each other and unable to suggest any short-term direction. Long-term GMMA lines are moving away from each other and hence are giving a bullish bias for the stock.

ICICIBANK correlation chart

ICICIBANK’s average correlation with the Nifty is 0.82 which is positive and very strong. The scrip will be closely replicating movement of Nifty. [stockquote]NIFTYBEES[/stockquote]

ICICIBANK volatility chart

ICICIBANK 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.

It appears that only one bulge-bracket analyst (Credit Suisse) is covering this stock and has an “out-perform” on it.

Given these technicals, we suggest a short-term Watch. A longer term call could be taken based on the directional break-out of the flag under formation.

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The StockViz Reference Portfolio – Jan/25

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It was a poor week for our portfolio.

When the NIFTY went up +0.15% our portfolio was down 6.7%. We had a lot of real estate scrips with us over the week, and because of the sector-rotation that happened, huge number of stocks were stop-lossed.

Although,  we are still pretty confident about the portfolio and we remain focused on our approach:

  1. Systematic
  2. Repeatable
  3. Testable, and
  4. Risk-managed

Talk to us about our Quantitative Portfolio Strategy Execution.

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