Wednesday, August 8, 2007

The India Street Analyst Upgrades and Downgrades – Review

The India Street previously reviewed some stocks in India Street Analyst - India Stock Upgrades and Downgrades – Part 1 and India Street Stock Analyst upgrades and downgrades – Part 2. Let us analyze the current technical picture of these stocks and re-assess our ratings.

Following ratings are used to indicate the effectiveness of the trend:

««««« Strong

«««« Good

««« Medium

«« Moderate

« Mild

The effectiveness of the trend is arrived at after taking into account the retracements, momentum indicators, volume indicators and direction indicators.

The ratings are for medium term and these are based on weekly charts.

A red « means mildly bearish; green «« means moderately bullish.

Development Credit Bank:

We gave a bullish ««««« rating for this stock previously. At that time the stock was on the 4th wave and as anticipated, it bounced back after hitting a low of 88.50. During the 5th wave, it managed to break the previous high at 120.55 but did not close above it. This move was not supported by the volumes either,

as price increase was accompanied by declining volume (see chart). We can see a “doji” body with long upper shadow, meaning selling pressure at higher levels. It was followed by a red candle (bearish engulfing pattern) and another red candle as confirmation (three outside down pattern). Now the bearishness is confirmed and we modify our ratings to bearish ««. Moreover it has formed a “double top” in daily charts and a close below 88.50 would mean further bearishness in medium term.

Sical Logistics Limited:

We gave a bullish «««« rating last time. But the stock did not break its resistance at 301.35 on a weekly closing basis and a downtrend has started. It has just broken its 38.2% retracement at 242.75 and closed below it. This is perfectly alright, since a decline after a long first wave would be healthy one.

As such, this correction will be a good opportunity to enter the stock. When the uptrend resumes, the stock should be able to break its resistance and move upward. Though the stock is on a downtrend (watch the declining volumes) it is bullish for the medium term and we re-rate the stock as «««.

PSL Limited:

This stock has been chosen as a “long term pick” in my previous article 5 Reasons to be Bullish in the Long Run. It has declined slightly (about 13.5%) on weekly charts, however this correction is good for the long term outlook for the stock. We still maintain our bullish ««« rating on this stock.

Cadila Healthcare Limited:

We gave a bullish «««« rating for this stock. It declined from 387 to 340 in July but managed to bounce back after hitting the support trendline. A “bullish three inside up” pattern has been formed over the last 3 weeks, which confirms further uptrend. There is no change in rating for the stock as of now.

FDC Limited:

The stock failed to break its horizontal resistance at 34.50 on a close basis, though it achieved a high of 36.80 during the last week of June.

It has continuously declined since then; it has even managed to break its support at 29. So we revise the rating for the stock from ««« to «««.

Global Vectra Helicorp Limited:

A bearish three outside down pattern occurred in the stock after a strong consolidation pattern as shown below.

Though the support level is yet to be breached, it is likely to be tested. Since it has closed below 61.8% retracement and no bounce back occurred, we revise our rating from «««« to «.

S.Kumars Nationwide Limited:

It has formed an “ascending triangle breakout” as shown below.

The technical target of 113.20 has already been achieved by the stock when it made a high of 115.90 during first week of July. It has not broken the support trendline yet. Apparently, stock is in 4th wave and a bullish engulfing pattern has been formed last week. If this could be confirmed by a positive close and green candle this week, stock is likely to resume its 5th wave, the technical target for which will be around 132. We revise our rating from ««« to ««««.