IDEA - Heading towards Rs.110-120 - Technical Analysis

Please find the technical analysis for IDEA cellular Ltd.The analysis is mainly done for medium-to-long-term investors. For this, I took 2 chart positions based on time-line -
1. Long term chart - 2007 - 2011
2. Weekly chart     -  Aug2010 - Nov-2011
Note: Chart source from www.bseindia.com

Summary of Analysis:
Idea has broken the resistance at Rs.80 of the long term ascending triangle pattern. This has significance to reach a target of Rs.120 in long term.

Target Price:
Medium term investors - Rs.110
Long term investors         - Rs.120

Stop loss - Rs.80

Detailed Analysis:

The long term chart clearly shows an ascending triangle pattern with it's neck linein red at ~Rs.80 and slope line in green. To support that this is a ascending triangle the volume has decreased as the slope line gets close towards the neck line.

The breakout has happened at April-2011 and I have encircled this breakout in red circle. Note: This breakout is clear as we could see a surge in vloume at breakout.

For this pattern:  Target price = Depth of the Traingle(40 points) + neckline(Rs.80) = Rs.120

I have marked the target price in Yellow line.  But before we hit this target price, we could see a resistance coming in at Rs.110.

Hence the medium target would be Rs.110 and long term target at Rs.120.

Now lets take a closer look after the break out. 

Here we could see a flag and pole pattern - with the pole being at Aug-2011 time frame and currently we are at the flag phase(probably close to the end of the phase).

This flag phase is also lucky to get a 15 week moving average support.

Hence once this flag phase gets broken, then we could expect to reach the targets close Rs.110.

For flag pole and pattern:

Target price = Length of the Pole(80 to 97.5 = 17.5) + Bottom of the flag phase(Rs.90) = Rs.107.5

This target of 107.5 of is close to the target what we mentioned in the long term analysis.

Dear Readers,

Hope you would find this informational. 

With this I also have request, to post your comments specifically at the areas like what I failed to notice and what errors I have done. I would take this as my gift!  
I would also take your appreciations as my motivation to further my equity and equity-oriented products research.

Thanks! 

NIFTY - valued fairly - based on 10 year historical parameters

I have made a chart out of the historical P/E, P/B and Div Yield values for NIFTY based on the data
collected from www.nseindia.com. I have also added 100 day and 200 day moving average(DMA) for the
above 3 parameters.

P/E - for most of the time, you could see the 200 DMA is within the range of 15-20. Considering this,
with the current PE at 17, it seems to me that the market is fairly valued now. But note the P/E is
calculated on standalone basis of the company reports and hence it might not reflect the exact picture.

To support the above call, lets compare the P/B value during 2008-peaks and the 2010-peaks.
The peak values of nifty during 2008 and 2010 were almost same, but the P/B at 2010 is far less.
This implies that the nifty companies' books has grown big but still they valued lesser than 2008.

This lesser valuation of P/B during 2010 might be due to economic environment, but during 2010 there
were no big worries(even the hikes in interest rate were pretty recent, 2G scam was the only hot issue).
At least today we have a whole bunch of economic worries like - EU problem, interest rate, Indian
Governance issues.

Now notice the div yield, which is getting lesser and so this could also be a reason for why the company
books are increasing in size. But given the dividend becoming lesser part this won't be a major reason for the
P/B values that we see today.

So in my opinion, even if few of the worries soften(don't even need to go away completely), then nifty has
huge potential to go up further. So be watchful folks!!

Business Line : Investment World / Young Investor : Bear phases in the Indian market

Business Line : Investment World / Young Investor : Bear phases in the Indian market

This article gives a good re-cap of all the bear phase events that has happened from 2000.

This one is for whoever interested in understanding recent Indian market dynamics.

BHEL - Be watchful on 250 and 200 - Technical Analysis -

Please find the technical analysis for BHEL (done on 26th Nov 2011). The analysis is mainly done for medium-to-long-term investors. For this, I took 3 chart positions based on time-line -
1. Very Long-term chart - 2002 - 2011
2. Long term chart - 2007 - 2011
3. Yearly chart - Nov-2010 - Nov-2011.
Note: Chart source from www.bseindia.com

Summary of analysis: 
Long term investors can hold BHEL as long it holds Rs.250. Not able to specify any target price in this tough environment.

• But if it breaks Rs.250 sharply, then it is safe to exit this. 
• But if it breaks Rs.250 gradually(over a period of month) and then it can be hold till Rs.200.
• Note: Rs.200 should be a strict stop loss!!

Detailed Analysis:

Here only the very long term chart(2002-2011) gives significant information as the yearly chart shows no support region for the fall that the BHEL is undergoing.

Very long term chart:

In the above chart, the red line at the top indicates the long term resistance(in fact close to the peaks) around Rs.500. This resistance was hit twice - Jan-2008 and Oct-2010. In neither of this instance, it was not able

to break this resistance. Note: Break at Jan-2008 above Rs.500 is not considered a break as it just 

momentary and no volume support to it.

After hitting the resistance at Rs.500 during Oct-2010, the trend reversed completely towards the downward direction. Then it was hoped to withstand the critical support(Blue line) at Rs325. But this support was clearly broken on Nov-2011(50 point drop from Rs.325 and very high volume). 

So 4 possibilities now:

1. 1. This kind of drop could cause a further continuation of this sharp drop i.e it could break Rs.250(green line), but this should happen in next week itself(week starting 28th Nov 2011). It is better to exit if this happen.
2. Can cause a 'Pole and flag' chart pattern. For this pattern to happen, for the next few weeks price should increase a little(that too gradually) and need to find a resistance at around - 300. Note during this gradual rise, the volume has to be low. If the above happens then it could break Rs.250 sharply. Need to be very cautious during the gradual rise period as it would very difficult to predict when the extension of flag pole could happen. So high risk investors can hold till it gives a sharp break at Rs.250.
3. Sharp reversal next week with descent volume- this could mean the long term support of Rs.250 is still active. Hold/small-buy for long term investor.
4. Very gradual drop below Rs250(only small candles has to be seen for the next 10 weeks period. Then it can be hold till Rs.200

Reference:

Putting down the long term chart(July 2006 - Nov 2011) showing the break at Rs.325(circled in red).

Putting down the yearly chart(Nov-2010 - Nov-2011) showing no significant support after breaking Rs.325.