Analysis: HDFCBANK (HDB)

Today’s pick is HDFCBANK [stockquote]HDFCBANK[/stockquote]. The stock has been on an up-move for most part of the year and it experienced the 52 weeks high of Rs. 700 in November. Since then the stock has been in a downward sloping flag formation. In the last three months, the stock has moved +4% vs. +7% of the Nifty’s.

HDFCBANK 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. 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.

HDFCBANK correlation chart

HDFCBANK’s average correlation with the Nifty is 0.71 is positive and quite strong. The scrip will be closely replicating the movement of Nifty. [stockquote]NIFTYBEES[/stockquote]

HDFCBANK volatility chart

HDFCBANK has a historical volatility in the range of 1.0 to 4.0. The scrip’s volatility however is currently in the lower end of the range and hence should not be a concern to the traders.

Analysts have positive expectations regarding this stock. Less than expected earnings might hit the street expectations in the coming reviews and might impact the stock as well.

Given these technicals, we suggest a short-term Hold. A break-out of the flag in either direction will trigger a longer-term call.

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Preetam’s List

Friday’s action: Dow +0.39% to 13649. S&P +0.34% to 1486. Gold +0.39% to $1691. London+0.36% . Germany –0.43%. France -0.07%.

With India’s key equity indices trading near all-time highs after a prolonged lull, private equity (PE) funds are feeling the heat from investors to cash out from their investments in public equity even as several mid and small cap shares, which constitute a majority of PE investments, continue to lag behind. (MINT)

SEBI has provided an option to institutional investors to bid for shares without paying any margin, but such bidders cannot cancel or revise the bids to a lower price, but can raise them, a move that will benefit the government’s divestment program and companies to meet minimum public holding rules. (ET)

VIX, retreated 8.2 percent to 12.46 today and has tumbled 45 percent since Dec. 28 whereas the markets have moved up 6% during the same period. And is at its lowest level since April 2007. The index measures the cost of using options as insurance against losses in the S&P 500, which has risen 6 percent in three weeks. The story is similar for Indian VIX as well. (Bloomberg) India VIX

Reliance Industries [stockquote]RELIANCE[/stockquote] has bought back shares worth over Rs 3,900 crore from public shareholders through an about year-long share repurchase programme, achieving just about 38 per cent of the target. Market analysts believe the purpose of the buyback was price stability and ensuring investor confidence in the stock, which the company has successfully achieved. (ET)

On January 10th the interest rate on Spanish ten-year government bonds fell below 5% for the first time in almost a year. The cost of new government borrowing is now about 2.5 percentage points lower than it was when worries over a break-up of the euro area peaked in July 2012 . The rate on ten-year Italian debt is approaching 4%, which is also close to 2.5 percentage points off the highs last year. (Economist)

Good luck!

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Weekly Recap

NIFTY.2013-01-14.2013-01-18

The NIFTY ended on a bullish note, shooting up +1.88% for the week.
Biggest losers were M&M (-5.53%), WIPRO (-5.38%) and HEROMOTOCO (-4.10%).
And the biggest winners were BPCL (+17.32%), ONGC (+15.51%) and DLF (+13.99%).
Advancers lead decliners 26 vs 24dii.2013-01-14.2013-01-18

Gold: +0.15%, Banks: -0.74%. Infrastructure: -0.74%,

Net FII flows for the week: $725.83 mm (Equity) and $39.37 mm (Debt)

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Analysis: JUBLFOOD

Today’s pick is JUBLFOOD [stockquote]JUBLFOOD[/stockquote]. The stock has been on an up-move since the beginning of last year and it experienced the 52 weeks high of 1,400 in October. Since then the stock has been in a downward sloping flag formation. In the last three months, the stock has moved -4% vs. +6% of the Nifty’s.

JUBLFOOD 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. 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.

JUBLFOOD correlation chart

JUBLFOOD’s average correlation with the Nifty is -0.06 is negative. The scrip will not be replicating the movement of Nifty. [stockquote]NIFTYBEES[/stockquote]

JUBLFOOD volatility chart

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

Given these technicals, we suggest a short-term Buy. A longer term call could only be taken based on the direction of the breakout from the flag in formation. Although, It will be beneficial to have trailing stop-losses in place.

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