Technical analysis of stocks making large moves in last six month

While doing technical analysis of financial markets or of stocks, few technical analysis indicators that most of us look for are the immediate and long-term support & resistance of the stock under analysis. Technical analysts use support and resistance levels to identify price points on a chart where the probabilities favour a pause or reversal of a prevailing trend.

Support occurs where a downtrend is expected to pause due to a concentration of demand. Resistance occurs where an uptrend is expected to pause temporarily, due to a concentration of supply. Market psychology plays a major role as traders and investors remember the past and react to changing conditions to anticipate future market movement, thereby forms the base for stock technical analysis. Therefore, while doing technical analysis of stock trends, support and resistance areas can be identified on charts using trendlines and moving averages.

Today we will try to do technical analysis of chart patterns & stock trends of stocks that have moved the most on either side in last six months i.e., from January 2022 till June 2022, using the moving average stocks & their probable support & resistance. We will also search reasons for the same and where the stock is headed further.

Varun Beverages, gained 37% in last six months

Varun Beverages Limited is an Indian beverage manufacturer, bottler, and distributor. Outside of the United States, it is the world’s second largest bottling company for PepsiCo beverages. Varun Beverages Ltd. a near-monopoly of PepsiCo is a solid play on the emerging beverage market in India.

As per the technical indicators of Varun beverages Ltd, it has gained 37% in the last 6 months. The 52-week low of the stock is Rs 472 per share, was touched on 05 July 2021, and the 52-week high at Rs 805 per share, recorded on 15 June 2022. For the Q4FY22, Varun beverages posted a robust 26.2% YoY sales growth. The company’s PAT nearly doubled or advanced 98.2% YoY to Rs 271 crore from Rs 137 crore driven by improvement in margins, reduction in finance costs, and higher profitability from international operations. Therefore, the reason for the such returns can be attributed to strong recovery which will continue going forward, led by growing out-of-home consumption, with the opening up of offices and traveling activity; uptick in volumes in new territories; robust growth in launched products; and growing refrigeration in rural/semi-rural areas.

As per the brokerage’s estimated target price of Rs 959 per share. Investors could see a potential upside of 22% in its share price. Moreover, the 50 EMA is above 100 & 200 EMA for the last 1 year, with stock taking support at Rs 686.

 

 

L&T technology services stock fell 45%

L&T Technology Services Limited (LTTS) is a global leader in Engineering and R&D (ER&D) services. With 868 patents filed for 57 of the Global Top 100 ER&D spenders, LTTS is a global technology company.

In last six months, L&T Technology has been continuously falling and has lost 45% of its market cap. It is not just L&T but almost all Information Technology stocks were trading in the negative zone. The reason behind the sharp fall in L&T Tech shares was the mixed Q4 results reported by the company and on the back of expensive valuation and margin contraction concerns.

The high demand for IT transformation in the pandemic also led to high attrition in the sector. To control this, companies undertook salary hikes, leading to the aforementioned margin contraction for IT companies. Infosys’ attrition rate jumped to 27.7% in Q4FY22, up from 10.9%t during the same quarter last year.in Q4FY21. JP Morgan (JPM) downgraded the IT sector to “Underweight” due to concerns about overgrowth and margins. Additionally, since inflation is likely to take longer to taper off, the high EBIT margins may also be tough to sustain. JPM is targeting 10-20%downsides in valuations for leading IT companies, including TCS, Wipro and HCL Tech. Therefore,
investors can wait till IT stocks settle & 50 EMA comes above 100 or 200 EMA and then consider taking position for longer term.

 

 

Bajaj FinServ fell 32% despite strong Q4FY22 results

Bajaj FinServ Limited is a non-banking financial services company based in Pune, India. It is primarily concerned with lending, asset management, wealth management, and insurance. Bajaj FinServ company registered strong growth in net profit by 80% YoY at Rs 2,420 crore for Q4FY22. The stock fell despite strong financials due to cost and margin concerns. As inflation is continuously going up followed by US rate hike.

This has become a strong headwind for finance stocks and therefore leading to a sharp fall in share price of Bajaj. As analysts remained mixed on the company’s future prospects, long term investors can consider accumulating stock as it is available at very cheap price currently.

 

 

Tata Steel charts turn bearish leading to 22% fall

Tata Steel, with an annual crude steel capacity of 34 million tonnes per annum (MTPA), is one of the world’s most geographically diversified steel producers. They are one of the few steel operators that are fully integrated – from mining to the manufacturing and marketing of finished products. The stock of Tata steel, fell 22% in the last six months. A slowing global economy fuelled by the Russia-Ukraine war & highest inflation in decades has led to an abrupt end to the great commodity bull cycle including steel & the other base metals. it is facing resistance at Rs
1080. Even the imposition of export tax on steel exports, become a major headwind for steel companies.

The stock has jumped nearly 7% from its record low of June 23, 2022. However, right now this stock is at a discount of about 43% from its record high. Analysts at JPMorgan do not see further declines in the domestic steel market. The foreign brokerage firm has an ‘overweight’ stance on the stock with a target price of Rs 1,400, which implies a more than 58% upside from the current market price.

 

 

Lupin’s weak performance in Q4FY22 lead to sharp fall of 34%

Lupin Limited is an Indian multinational pharmaceutical company based in Mumbai, Maharashtra, India. It is one of the largest generic pharmaceutical companies by revenue globally. The company’s key focus areas include paediatrics, cardiovascular, anti-infectives, diabetology, asthma and anti-tuberculosis.

Lupin has seen a sharp fall in share price of 34% on technical charts in past six months. Investors are visibly displeased with the company’s March 2022 quarter results announced in May 2022. Lupin’s consolidated EBITDA in Q4 declined a whopping 68% YoY to Rs 227.6 crore. This at a time when revenues have risen 2.6% to 3,883 crores. Lupin derived a significant portion of its revenues from North America and India. Revenue from North
America fell 5.3% YoY while India saw 5% growth. Therefore, weak quarterly performance took toll over stock, and it started declining.

Analysts from ICICI Direct Research said, “We believe, resolution of warning letters and clearance of Official Action Indicated (OAIS) status on plants could be the near-term trigger along with progress on the margins front.” Therefore, investors should wait for results in H1FY23, before taking any stance.

 

 

Adani Transmission initially surged but recently started falling on account of weak Q4 & FY22 results

Adani Transmission Ltd is engaged in the business of generation, transmission, and distribution of power throughout India. It develops, owns & operates transmission lines across the states of Gujarat, Rajasthan, Bihar, Jharkhand, Uttar Pradesh, Maharashtra, Haryana, Chhattisgarh, and Madhya Pradesh.

Adani transmission has given a negetive return of 46% till now in 2022. Power stocks surge with an expectation of high demand during summer. The shortage of electricity has shot up to 1.4% of demand over the last month. That’s why in the past few weeks, power stocks have gained momentum. However, after reaching peak in May, the stock has started losing with technical indicators becoming bearish. In the last month it has lost nearly 28%. Weak Quarterly and Annual Results led fall in shares of Adani Transmission as it reported a 7.6% YoY decline in net profit at Rs 240 crore for the March 2022 quarter. The net profit of the company came in at Rs 260 crore in the same period last year.

The stock has achieved a 52-week high of 3,000 on 12th April 2022 and a 52-week low of ₹863 on 6th July 2021 with 50 EMA above 100 & 200 EMA for over a year. But now the EMA has started moving down as seen from technical analysis of charts. Moreover, it is taking a solid support at Rs 1861 and resistance at Rs 2900. Therefore, investors should not make any fresh investments and wait for the stock to break through resistance with high volumes.

 

 

Bharat Dynamics surged 73% in last six months

Headquartered in Hyderabad, Bharat Dynamics Limited (BDL), was incorporated on 16 July 1970 as a Public Sector Undertaking under the Ministry of Defence, Government of India to be the manufacturing base for guided missile systems and allied equipment for the Indian Armed Forces.

According to the technical analysis of Bharat Dynamics, it has given stellar returns 73% in the past six months. On February 2, 2022, the company signed a contract worth Rs 3,131.82 crore with the Indian Army. The contract is for manufacture and supply of Konkurs – M Antitank Guided Missiles to the Indian Army and will be executed in three years. With this contract, the company’s order book position stands at Rs 11,400 crore (net), BDL had said in
an exchange filing.

It is also getting leads for export of the missile from about nine countries. In addition to domestic market, BDL is also looking up to the foreign customers to consolidate the order books of the Company as well as become a global exporter of missiles system, which is a first of its kind.

While the outlook for the stock of Bharat Dynamics has now become bearish. Although the stock has been consolidating sideways for about a week, still technical indicators like moving averages are bullish in long term. Moreover, several analysts are expecting the stock to break through support and enter into a downtrend. Therefore, investors should keep a close check on the stock for next few trading sessions.

 

 

Mahindra & Mahindra trading at 52 weeks high with 30% gain

Mahindra & Mahindra Limited (M&M) is an Indian multinational automotive manufacturing corporation headquartered in Mumbai. Part of the Mahindra Group, M&M is one of the largest vehicle manufacturers by production in India.

M&M stock price has increased by more than 30% over the past six months. M&M) reported strong Q4 numbers in FY22. Both the top and bottom lines of the company registered double-digit growth during the quarter. On the charts, the stock of M&M is in a uptrend since last four months and currently trading at its all-time high of 1072 with 50 DMA well above 100 & 200 DMA. Even in the last few months, where Nifty 50 has gone down by a significant percentage, M&M has given robust returns to the investors.

As Semiconductor supplies improved in Q4 resulting in highest ever quarterly UV volumes, the same is projected for future as well. Moreover, technical indicators of stock like moving averages are already bullish, both long- & short-term investors can consider investing in the stock

 

 

About the Author

Ketan Sonalkar (SEBI Rgn No INA000011255)

Ketan Sonalkar is a certified SEBI registered investment advisor and head of research at Univest. He is one of the finest financial trainers, with a track record of having trained more than 2000 people in offline and online models. He serves as a consultant advisor to leading fintech and financial data firms. He has over 15 years of working experience in the finance field. He runs Advisory Services for Direct Equities and Personal Finance Transformation.

Note – This channel is for educational and training purpose only & any stock mentioned here should not be taken as a tip/recommendation/advice

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