Today’s pick is PANTALOONR [stockquote]PANTALOONR[/stockquote]. The stock was trading in between Rs. 150 – Rs. 200 for most part of the year. It saw a bullish breakout of the range in November. The stock saw its 52 week’s high of Rs. 276 in January, and since then it is on a downtrend. In the last three months, the stock moved -32% vs. -4% of Nifty’s.

PANTALOONR Technical Analysis Chart

Oscillator RSI and CMO are in the over-sold territory. The stock is currently trading in the lower range of the Bollinger bands. Short-term technical saw a 9X4 bearish cross-over a few days ago.

The MACD line and signal line are very close to each other and are not suggesting any direction. Also, the Long-term and short-term GMMA lines are inverted in a bearish move.

PANTALOONR Correlation chart

PANTALOONR’s average correlation with the Nifty is 0.60, which is positive and strong. The scrip will be closely replicating movement of Nifty. [stockquote]NIFTYBEES[/stockquote]

PANTALOONR Volatility chart

PANTALOONR has a historical volatility in the narrow range of 0.6 to 1.6. The scrip’s volatility is currently in the lower end of the range.

Given the technicals, we suggest a short-term buy. A long-term call could be taken depending on the directional move of the GMMA lines and price action near the support levels. Also, it is advisable to have a relaxed trailing stop-losses level to book profits in case of a trend-reversal.

For a better picture of the Retail sector as a whole, you can look at what the expert has to say here.

Organized Retail Creates Jobs, Spurs Growth

Indian retail contributes 11% of our country’s GDP. In the last few years, organized retail stores have come up in cities and towns in a big way. The trend has been triggered by the change in the Indian consumer in terms of purchasing power, choice preferences, demand for quality control, and value for money. Organized retail creates better opportunities and profit for the end-suppliers such as farmers, spinners, rural craftsmen, etc. It also creates price competition that works for the consumers’ good.

Growth of indian retail

The growth of organized retail stores like Big Bazaar, Shopper’s Stop, Lifestyle Retail and Spencer’s Retail is already derailing small mom-and-pop stores, with or without FDI. On the other hand, organized retail employs 40 million Indians, offers organized shifts and salaries, fair work policies and generates $450 million revenue. Most importantly, organized retail creates direct relationships with suppliers, cutting out the middle man’s cut which can be exorbitant. While the sale of a kilogram of potatoes will get a farmer only Rs.3-4, it is sold in the market for Rs.25. Organized retail ensures farmers get a better deal.

Organized retail also supports agricultural workers with infrastructure to reduce food spoilage – cold storage for perishables like fruits and vegetables, hygienic transport, etc. Currently, food wastage leads to 30% losses that contribute to our current inflation rate. The sad state of backend infrastructure in India may get addressed with FDI support as the government needs both funds and expertise in this area.

In September 2012, the government sanctioned FDI in single-brand retail – allowing 100% ownership on the condition that 30 percent of goods be sourced from Indian small and medium suppliers. FDI in multi-brand retail was also allowed subject to state government sanctions, with 51% ownership and a minimum of $100 million initial investment spread over 3 years. The government has also advised foreign parties to invest 50 percent in backend infrastructure development.

Though many heated arguments have prevailed in the political arena over FDI, it isStatewise FDI Retail breakout supported by organized retailers in India and rural farmer associations such as Consortium of Indian Farmers Associations (CIFA). However, the restrictive regulations, state-level uncertainties, bad infrastructure, and high investment stake will limit the entry of foreign investors. Walmart, Tesco, and Carrefour are still testing the waters in wholesale markets though they were expected to launch retail stores soon.

Organized retail in India faces other challenges too such as:

  • Wide geographical spread
  • Varying customer preferences across states and regions
  • Limited access to retail markets because of FDI opposition in some states
  • Complex distribution network
  • Taxation laws that favor small retailers
  • Cumbersome real estate procurement and local laws
  • Resistance in some local areas (political and coercive)
  • Limited use of IT systems for analysis, supply chain management, etc.
  • Small ticket size
  • Lack of retail management education
  • Lack of retail workforce trainings

Organized retail (with FDI support) has helped economies like China, Japan, and Malaysia increase local employment, competition and product quality. There is no reason why the same can’t happen in India over time. Joint ventures with foreign players, multi-format and single-brand stores will bring down prices, create wider choice of quality goods, and drive more profits to the supplier’s end. However, political tussles and unfavorable conditions may deter many foreign retailers from investing in India.

[stockquote]PANTALOONR[/stockquote] [stockquote]TRENT[/stockquote] [stockquote]SHOPERSTOP[/stockquote] [stockquote]FUTUREVENT[/stockquote]


Today’s pick is [stockquote]PANTALOONR[/stockquote]. The stock is currently trading around the same price where it was year ago – range bound between 130 to 220 levels for almost a year. However, it recently zipped past its resistance at 200 on higher volumes. In the last three month period, the stock is up 30% vs. 7% for Nifty.


Oscillators RSI and CMO are currently at 62 and 18 and are closing towards over-bought territory.

MACD line has just crossed the signal line from below signaling a bullish movement for the coming days.

Long term set of GMMA lines are fanning out – which is a bullish for the long term. Due to the recent down-trend in the stock prices the short-term lines are constricted and are not signaling any movement.

In addition to these technicals, the stock seems to have some momentum behind it with 4 cross 9 and 9 cross 18 EMA bullish crossovers seen in the past week.


PANTALOONR’s average correlation of 0.60 with the Nifty is positive and strong. The stock will replicate the movements of Nifty closely. [stockquote]NIFTYBEES[/stockquote]


PANTALOONR had a historical volatility in the range of 0.6 to 1.6. Currently the stock’s volatility is towards the lower side of the range.

Looking at these technicals a short-term buy is suggested. For the long-term, the GMMA lines are giving a bullish signal for the stock and a break-out above the 220 levels will confirm the signal.

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