SPARKS IN SPARC (CMP:108)

RECOMMENDATION - BUY AT CMP / DECLINES

TARGET- 128 , STOP-98, TIME -T+14 DAYS (APPROX)

RATIONALE -

The mid cap pharma stocks have been showing quite a lot of traction lately. One such stock in this sector is Sun Pharma Advance Research - SPARC.

Wave 1 for this stock was relatively docile unlike its other pharma cousins. The current move to 108 has confirmed a breakout and hence the beginning of wave 3. Based on this fact the target for this stock is likely to be around 170 in this move. However, over the short term 128 seems to be the more reasonable expectation based on the width of the consolidation.

  

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Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

LIBERY SHOES - LIBERTY TO FLY

RECOMMENDATION - BUY IMMEDIATELY

The stock now seems to have the liberty to fly after breaking out of its cage of 90 to 120 !!

TARGET- 148 , STOP-114, TIME -1 MONTH (APPROX)

RATIONALE -

The stock had been trading in a zone of 90 to 120 since many months. Today's move has decisively broken out of the range with very good volumes.

Vigor of the breakout today leaves very little doubt about the beginning of wave 3 - See the diagram to see how the first wave unfolded in neat 5 waves. Since the wave 1 was dosile, a very dynamic wave seems to be in the offering.

The idea is to just pile on to the stock with a stop at 114 (If the stock falls to this level our assumption of wave 3 would be challenged)

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Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

TALWALKARS (247.50)

RECOMMENDATION - BUY AT CMP

TARGET- 294 , STOP-230, TIME -T+14 DAYS (APPROX)

RATIONALE -

The stock had a dream run post its listing on the bourses. A direct play on the consumption story and emergence of the affluent middle class, has brought the stock on the radar of every portfolio manager wanting to generate alpha for his portfolio.

The stock topped out around 260 and has been correcting in a downward sloping channel since then. Today's upmove has decisively breached the upper reaches of this channel with decent volumes. This phenomenon is hinting at the possible resumption of the uptrend.

The brief correction  in terms of time (1.5 months) and quantum (38.20% approx) indicate the innate strength of the stocks benefiting from the consumption boom.

Traders may consider buying the stock at cmp of 247.50 with a stop placed at 230 (if the stock reaches 230, the prognosis of the breakout of the channel would negated)

 

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Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

TVS MOTOR (CMP:77.50)

RECOMMENDATION - BUY AT CMP

TARGET- 89 , STOP-73.50, TIME -T+14 DAYS (APPROX)

RATIONALE -

The stock had been trading in a zone of 71 to 80 since the last couple of months. This period of relative silence can be construed as a pause in the overall trend looking at the structure that has evolved.

The price formation looks like a right angled triangle and today's upmove seems to have resulted in a breakout. Since the width of the triangle was about 9, a target of 89 on the short term looks very imminent.

A fall in the prices to 73.50 however would mean that the stock comes back in the trading range convincingly and the prognosis of a breakout would not hold water. Hence this level may be used as a stop for long positions.

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Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

CITY UNION BANK (CMP:50.50)

RECOMMENDATION - BUY AT CMP

TARGET- 57 , STOP-47.50, TIME -T+14 DAYS (APPROX)

RATIONALE -

The stock peaked around 50 in August after the stupendous upmove. Ever since then, the stock was languishing in a 10-15% range. Today's move however is unlike the others that have taken place in the last couple of months.

With the rally above 50, a breakout of a 'rectangle' pattern on the daily charts in confirmed. Distinct pick up in turnover lends credence to this breakout. The fact that the consolidation prior to the breakout occured just above the erstwhile high of 43 established in 2008 makes the stock even more interesting.

The bullish recommendation comes under the threat if the stock slips back into the trading range. Hence, a stop of 47.50 is advisable on this long trade.

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Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

TATA ELXSI (CMP:292)

RECOMMENDATION - BUY AT CMP

TARGET- 335 , STOP-273, TIME -T+14 DAYS (APPROX)

RATIONALE -

The stock had been in a sideways trading range for many months. It finally bottomed out around the 230 and rallied. 

This rally has shown 4 distinct waves so far. Third wave topped out around 295 and the stock tumbled to 245. The prognosis of the third wave came under severe scrutiny on Monday's trading session because of the marginal overlap between the first and third wave.

An 'head & shoulder' pattern evolved on the hourly charts with neckline at 273. This neckline was decisively breached on a closing basis. But the stock managed to stage a strong bounce back almost immediately confirming the failure of the pattern. Failure of such potent reversal patterns lead to sharp rally on the upside since all weak hands are out of the system due to the technical jolt. Bad results would have caused even greater panic. 

The confluence of the above factors makes a very interesting trade set up. The risk is clearly defined at 273 (the break down level of the perceived head & shoulder pattern). Based on the failure of the pattern an immediate target of 335 can be easily ascribed.

Previous recommendations on the stock - click here

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Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

PETRONET (CMP:122.50) - TRADING BUY CALL

RECOMMENDATION - BUY AT CMP

TARGET- 134 , STOP: 117.50, TIME-T+4 DAYS (APPROX)

Note that this is a trading recommendation purely based on momentum set up.

Rationale :

The stock touched a high of 118 odd in August and thereafter kept consolidating within kissing distance of the all time high around 122. It notched up approximately 8% gains in yesterday' session showing distinct tendency to come out of its one month long slumber. The stock has come under some normal profit booking after the sharp rally yesterday - pullback after the breakout.

The stock is likely to show momentum once this brief pullback ends. The risk reward ratio too is the favor of the long trade since the pivot on the hourly chart is placed just below 118. Traders may buy the stock for for a target of 134 keeping a stop below 117.50.

Upgrade for WAVE PRO (Rs 1500 p.m only) for the best results in your trading.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

COSMO FILMS (CMP:168)- POISED FOR TAKE OFF

RECOMMENDATION - BUY AT CMP

Investors and traders alike may buy the stock for short to medium term given the valuation cushion and sheer momentum.

SHORT TERM TARGET  -196 (2 WEEKS)

MEDIUM TERM TARGET -224 (2 MONTHS)

STOP LOSS : 149 

Company Backdrop : 

Cosmo Films was started in 1981 to manufacture Bi-axially Oriented Polypropylene Films (BOPP) for the first time in India.

The company is engaged in the production of Wet Laminating, Printing and Pouching, Label Films, Soap Wrap Films, Over Wrap Films, Tape & Textile and Thermal Laminating Film for Graphic Finishing.

Since inception Cosmo has maintained market leadership in both the domestic and export market. This is reflected through its association with leading FMCG Brands worldwide for providing them with cost-effective innovative packaging solutions.

RATIONALE : 

Tyre stocks and auto component stocks are bought as proxies to growth in auto stocks. If we take the same logic forward - It may not be wrong in buying the stock of a company that benefits from the robust performance of the FMCG companies. COSMO FILMS provides packaging solutions to many of the well known FMCG majors and hence makes a case for a good investment idea.

 The stock currently trades at reasonable valuations - TTM PE OF 7.40 and Price/Book of 1.05.

 

The stock completed wave 1 of wave 3 and 164 a few weeks back. Since then a minor correction took it to 140 odd constituting wave 3. Today the stock has gone above the high registered in wave 1 decisively - clear indication that wave 3 has begun. This incidentally has also resulted in a breakout to ALL TIME HIGHS. The stock has taken about 5 years to cross this level. This makes us feel that the move is likely to be very strong.

Upgrade for WAVE PRO (Rs 1500 p.m only) for the best results in your trading.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

APOLLO TYRE (CMP:85) - BUY CALL REITERATED

We had come out with a REPORT ON APOLLO TYRE initiating a buy call at 81 for target of 98 in September. However, the performance of the stock has been lackluster.

The recent price activity however suggests that this period of underperformance is like to end. Hence, WE REITERATE INITIATING LONGS ON THE STOCK.

Target -98 , Revised Stop-79, Time Horizon - t+14 days

Rationale -
 The upper reaches of the triangle shown in the diagram above have been crossed today - Breakout of a triangle pattern !
 This pattern has evolved in the wave 2 of wave 3 (though triangles are common in 4th waves). The fact that wave 2 unfolded itself in the form of a triangle rather than the more common zig zag is the testimony of  the underlying demand for the stock.
A target of 98 (very conservative) seems to be in the offering based on the sheer equality of waves.

READ PREVIOUS REPORT

 Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

JINDAL DRILLING (CMP:608)

RECOMMENDATION - BUY AT CMP

TARGET-665, TIME-T+4 DAYS, STOP-572

Add caption

Rationale- 

The stock has been consolidating ever since it broke out a long term downward sloping trendline in early september. In the process it corrected 38.20% approximately. The volumes spiked up today accompanying a handsome price rise. This signals the strong possibility of resumption of the uptrend.

Today's upmove marks the beginning of wave 3 of 3 (provided that the level of 572 is not violated). Since wave 1 was relatively weak, a very sharp rise may be possible in the current wave.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

UPDATE ON CEAT (CMP:168)

TRADE WITH WAVES recommended a 'BUY' on CEAT on 24th of Sept. READ THE REPORT.

Since then the stock has traded in a sluggish fashion with a negative bias. This made me feel that the patrons need to be updated (Thanks to Ankur who brought the importance of updates to my notice via his comments!) on what my views are about it right now.

Although the stock has drifted down to 168 (loss of 5% from the recommended price), I continue with my bullish stance on the stock. 

Rationale -
The stock is currently in wave 2 of 3, correctly mentioned in my previous post. I had expected this wave 2 to end with a mere 23 percent retracement. This has not happened. Wave 2 is persisting for longer than what I had envisaged. However, the prognosis continues to be the same. Wave 3 of 3 is around the corner - it may not be surprising to see a 40% return from the cmp in this wave.

Oversold signals are imminent on daily oscillators hinting at the possibility of a bottom very soon.

The trend continue to be intact and hence this decline needs to be treated as an aberration and construed as a buying opportunity (if you have not bought till now).


Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

REL MEDIA (CMP:291)

Recommendation - Buy at cmp

Target -324 , Time-t+4 days, Stop-273

Kindly note that observing strict stops on such momentum buys is essential.

Rationale -
The stock has recently broken out of a long term downward sloping trendline. Notice the spike in turnover accompanying this breakout.

On the hourly charts oversold signals are imminent. Moreover, the hourlies suggest that this recent correction from 300 to 270 post the breakout has taken the form of wave 4 - Certainly another upmove in the form of wave 5 awaits us.

Traders may buy the stock at cmp for target of 324 (based on wave relationships).

This recommendation is very similar to JINDAL POLY recommended at 1005 on the same parameters last week. Patrons of the blog very well know how this stock rocketed (currently 1160) after we spotted it - READ REPORT ON JINDAL POLY.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

AMAR REMEDIES (CMP:109) - Just Broken Out

Recommendation - Buy at cmp

Target- 128, Time-t+4 days, Stop-102

Observe a strict stop as the call is based on momentum resulting from a breakout.


RATIONALE

The stock had been consolidating in a range of 98 to 112 forming a pattern called 'Triangle'. Today's upmove to 109 with good volumes has confirmed the bullish ramifications of this pattern. This breakout has occured amidst a weak broader market lending credence to the above analysis.

Traders may buy the stock keeping a strict stop below 102 (since its only a momentum call) for a target of 128 in the coming few trading sessions.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

COLPAL (CMP:859) - Shift to Defensives

Recommendation - BUY AT CMP

Target-940, Stop-827, Time - t+4 days

Rationale -

Given yesterday's fall in the indices, skepticism about the short term bullishness has set into the minds of the market fraternity. This would mean that the trading money would like to hide into the so called defensives (of course no one wants to move to cash, given the market momentum). One such defensive stock is COLPAL which has corrected a shade below 10% in the last week or so.

Oversold signals are imminent on the hourly charts. Moreover, this fall has the form of a zig zag that has achieved its target. The downside is fairly protected in the zone of 840-850 (the erstwhile consolidation from which the stock broke out in frenzy).

The robust chart set up and rotation into defensive stocks is like to result in a short term upmove for this scrip.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

KARNATAKA BANK (CMP:184)- Finally Ready to Move

Recommendation - Buy at cmp

Target - 208, Stop-176, Time-t+9 days.

The stock is equally good for traders and investors (with time horizon of 3 months or more) and hence one can afford to be fairly aggressive in this recommendation.

Rationale :

The stock had broken out of a parallelogram on the daily charts and has been consolidating since then. MACD histogram which measures momentum has registered a two month high - the same has not been exhibited by the underlying price though. This indicates an impending spell of buoyancy in stock prices in the coming few days.

The stock seems to be heading in wave 3 of 3 as per the labelling in the diagram below. Given the unambiguity about strength of wave 3, it makes sense to initiate longs at the cmp aggressively.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

JINDAL POLY (CMP:1005)

RECOMMENDATION - BUY AT CMP

Note that this is a pure trading bet and strict adherence to stops is imperative for safety of capital.

TARGET -1180 , STOP-955, TIME-T+9 DAYS

RATIONALE :

The primary reason for this recommendation is sheer momentum. Strength in the RSC and a fresh breakout on this indicator hints at the possibility of a fresh upswing in the stock price.

A flat correction in the form of a 'abc' with a 'c' wave failure has been exhibited on the hourly charts. The retracement during this correction was very shallow hinting at the underlying strength of the scrip.

Traders may buy the scrip keeping a stop below 955 (a one percent filter below the perceived C wave). The likely target based on the width of the pattern and the erstwhile wave form can be pegged at 1180 in the coming 10 days.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

TATA ELXSI (CMP:268)- Safe Play

RECOMMENDATION - BUY AT CMP

TARGET-345, TIME-3 MONTHS, STOP-245


Rationale:
Traditional Technicals - A breakout from a 'wedge' has been witnessed. The prolonged sideways move ranging about 9 months, is likely to give an additional fillip to the stock going forward.

Elliott Wave Positioning - The stock seems to have completed its wave 2 around 245 recently. This makes the stock a very good buy, considering the dynamism associated with third waves.

Oscillators - Weekly oscillators are oversold hinting at the possibility of a rally in the coming weeks.

Target - A very conservative target may be 345 in the short term. However much higher levels await for patient investors.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

ASHOK LEYLAND (CMP:74) - Upmove Likely in Short Term

RECOMMENDATION - Buy at cmp of 74
Kindly note that it is a trading recommendation for the short term and strict adherence to stops is imperative.

Target -86, Stop-70.50, Time-T+14 DAYS


Rationale -

Performance Backdrop : The stock has been performing in line with the other auto stocks. A tapering off in momentum was witnessed in the last one month despite the robust run up in the broader market and the sector as a whole. This patch of underperformance did not create any lower tops and bottoms, thereby not contributing to any weakness.

Trendline - The recent drift in the stock prices have brought it very close to the trendline shown in the diagram above. This line is likely to act as a support for the stock.

Indicator - The Stochastic indicator is portraying an oversold reading - Oversold readings in established uptrends are good entry points judging from any yardstick.


The factors mentioned above in conjunction with other detailed technical studies prompt a buying opportunity in the stock for the short term for a target of 86. A stop of 70.50 (one percent filter below the trendline) may be observed to manage the downside risks.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

JINDAL SOUTH WEST HOLDINGS (CMP:2148)

RECOMMENDATION - BUY AT CMP
TARGET- 2900, TIME HORIZON-3 MONTHS, STOP-1845

RATIONALE :

The stock had been consolidating in a range of 1600 to 2100 for almost 1 year. This range was conclusively broken recently with a remarkable increase in turnover.

During this consolidation, the stock consistently maintained above the 200 dma signaling the innate long term strength.

The consolidation which constituted wave 2 just retraced about 25% of the rally from March09 lows. Such resilience after sharp rallies auger well for the medium to long term trend.

The risk/reward ratio is fairly favorable buying at the current market price. The downside seems to be restricted to 5-8% whereas immediate upside can be in excess of 30%.

The table above shows the investments of the company in various equity/preference shares. The value of these investments are approximately 10% more than the market value of the company - However, this is a very conservative estimate as all unquoted shares have been taken at cost which is unrealistic to say the very least. The actual discount on the stock may easily be to the tune of 20-25%.

Buying a company where the value of embedded assets is much more than the market cap provides a lot of margin of safety.

Due to the reasons mentioned above, we feel that the stock is poised for decent upsides in the short to medium term.


Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

Liberty Shoes (CMP:109) - Back in fashion

Liberty Shoes seem to be back in fashion in the stock market atleast.

RECOMMENDATION - BUY AT CMP OF 109
Trading Call
Target- 144, Time- t+14 days, Stop-102

Rationale :
Conventional Technicals : A breakout seems to have occured from a relatively rare 'Diamond' pattern with conspicuous increase in turnover at momentum.
Elliott Perspective : Wave 2 of the rally that began in March 09 seems to have ended around 90. Today's price action seems to confirm that we are well and truly on the wave 3.

Kindly note that this is a momentum based trading call and hence adherence to stops for capital protection is imperative.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

Movies on Stock Markets - Must See!!

ROGUE TRADER

Released : 1999
Based on the book :Rogue Trader: 'How I Brought Down Barings Bank & Shook The Financial World'

Plot : Nick Leeson, the protagonist (or villain - depends the way you see it!!) has been portrayed as an ordinary clerk working for Barings Bank. His ambitions are not ordinary though. He wants to become the manager for stock market trading operations. Here is how the story unfolds-

The bank gives him an opportunity to sort out some issues at Jakarta. He seizes the opportunity with both hands. He meets Lisa whom he later marries. (Some obscene explicit scenes follow which were not at all required - They halt the story rather than taking it forward.)
Impressed by his success in Jakarta, the bank asks him to take charge of the trading operations in Singapore. However, he is not allowed to hire skilled staff as a cost cutting measure (Penny wise Millions of Pounds foolish... as it turned out). The bigger blunder was not to seperate the trading and backoffice department.
Nonetheless, the first year of operations were extremely profitable although he kept breaking the rules and covering losses. His performance though was so good prima facie that no one even raised a finger at him. He kept getting more and more money - but kept making bigger and bigger blunders - In his words, he was sitting on an volcano which was waiting to erupt.
Ultimately, his reckless trading operations resulted in bankruptcy of the bank - sold at a princely sum of 1 pound !!

Takeaways - The movie shows the greed factor in a very diligent yet explicit manner playing out in the stock market. Hazards of averaging a loss, arguing with the market, being greedy and hopeful etc in the markets have been portrayed remarkably -

A must watch for every stock market aspirant and veteran alike !!

GIC HOUSING (CMP:143) - TO PLAY CATCH UP IN STYLE

RECOMMENDATION - BUY AT CMP OF 143
TARGET - 178, STOP-132, TIME HORIZON -1 MONTH

Rationale -
Traditional Charting Perspective - The stock has exhibited a breakout from a consolidation (triangle) pattern with a distinct increase in turnover today. This pattern is likely to give strong tailwind to the stock in the short term.

Elliott Wave Count - The recent consolidation may be defined as wave 2 of wave 3 in Elliott nomenclature. The briefness of this wave 2 both in terms of amplitude and time speak volumes about the likelihood of a powerful wave 3.

Peer Group Action - The housing finance companies have been on a role lately led by LIC Housing. Others like Gruh Finance, DHFL have also been doing well.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

CEAT (179) - An attractive investment

RECOMMENDATION - INVEST AGGRESSIVELY TARGET - 270, TIME HORIZON -6 MONTHS, STOP-160 Investors!! Just dont miss out this one.

RATIONALE :
Traditional Perspective : The stock had been trading in a wide band of 140-185 since Oct 2009. Interestingly, the earnings of the company have increased substantially during this consolidation. This earnings expansion is likely to provide virility to the breakout.
Off late, the rally from 140 odd was successful in breaking out of this range decisively. Since then the stock has been retracing, building steam for the next upmove. - A breakout with vigor and a pullback - Classical Buying Technique.

Elliott Perspective - The stock has is amidst wave 2 of wave 3 - refer diagram above. Once this wave 2 plays out, an explosive upmove in the form of wave 3 of 3 is on the cards.

Valuations are compelling - The stock is available at a trailing twelve month PE of 5.32 and a book value of less than 1 - Cheap by any stretch of imagination.

Proxy to the Auto Boom - Although the auto sector is doing well, the stock prices have run up considerably making valuations unattractive. But the same is not case with the tyre companies which are still trading below/around the highs seen in 08 at reasonable valuations.

Land Sale : The company intends to unlock value by selling 25 acres of land at Bhandup (approximate price of 500 crore). The sale proceeds are substantial considering the fact that CEAT has a market cap of about 600 crore. Hence, buying the stock means acquiring a tyre company with an annual turnover of approximately 3000 crore at just 100 crore.

A reasonably priced company with good prospects given the auto boom and excellent chart formation - What else can we ask for ??

UPDATE ON THIS RECOMMENDATION

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

APOLLO TYRES (CMP:81)

RECOMMENDATION : BUY AGGRESSIVELY AT CMP

HEADING FOR WAVE 3 OF 3 !!

TARGET- 98 (conservatively), Time Horizon - 1 month, Stop-74

Rationale :
Elliott Perspective : The recent rally from 59 odd to 88 was the 1st wave of 3rd wave that started in 08-09. Since then the stock has declined to 81 in a classical zig zag retracing 23.80%. With imminent signs of the ending of the 2nd wave, it may be prudent to start buying the stock anticipating the wave 3 of 3.

Traditional Perspective : The recent sideways move seems to have evolved into a flag pattern. This normally occurs half way through any rally. Hence it may not be unconceivable to see the stock fly away 30% in the short term.

Risk Management : Since strong waves very rarely retrace more than 61.80%, it may be prudent to observe a stop at 74.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

CENTRAL BANK (CMP:188)

RECOMMENDATION : Buy at cmp
Target-210, Stop-179, Time-t+9 days

Rationale :
Significant traction post the breakout above the 170 level validates the ongoing bullishness. The positive rub off from the performance of other banking stocks makes it good momentum based trading bet.

KRBL (25.50)

RECOMMENDATION : BUY AGGRESSIVELY AT CMP
Target -37 , Stop:22, Time Horizon: 4 months


Rationale :
Elliott Perspective : Wave 1 and wave 2 have played out since the low of 08-09. Breach of the trendline shows the end of the 1st with the 2nd wave retracing barely 23% portraying innate strength in the stock. 1st and 2nd wave of the 3 rd seems to have been done and a move above 27 would give confirmation about the commencement of wave 3 . However it may be prudent to initiate positions right away because it may be very difficult to buy since the wave 3 is expected to be explosive.

Risk Perspective : The stock is currently trading very close to its support zone around 22.50-24. The stock has comfortably held on to this zone despite the ups and downs in the broader market in last few months. Hence, buying near the support is likely to be a safe ploy.

Peer Group Price Movement : Kohinooor Foods is trading at its rock solid support of 54 whereas Daawat too is doing the same around 60 (very close to the lows registered during the panic sell off of 08-09)

AMARA RAJA BATTERIES (CMP:193)

RECOMMENDATION : BUY AT CMP
Target - 223, Stop: 184, Time-T+4 days

Rationale :
Elliott Perspective : As the labelling in the above diagram suggests wave 1 and wave 2 have played out since the 08-09 lows. A mere 23.6 % correction and a C wave failure in wave 2 are embellishments of strength for the stock. Since the wave 1 of wave 3 has not been very powerful, it is only fair to assume a blowoff in 3 of 3.

Traditional Perspective : After breaking out of the sideways trading range the stock has pulled back. The gradient of this pullback highlights the sanctity of the breakout.

Risk Management : A stop below the low of wave 2 of wave 3 (i.e 184) can be used. If 184 breaks, the labelling would be rendered incorrect.

APOLLO TYRES (CMP:73)

RECOMMENDATION : Buy at cmp
Target - 88 , Stop : 68.50, Time - T+9 days

Rationale :
Elliott Perspective :Wave 1 and wave 2 completed around 59. Fall from 78 to 70 odd seems corrective and comprises the 4th wave of the 3rd.
Traditional Perspective : Fall from 78 to 70 odd comprises the classical pullback after the breakout.