Look at Britannia's shares! Your evening snack is now more lucrative!

Hello Readers!

Today we will discuss your evening tea ka sathi- Britannia!

Ticker:           BRITANNIA

CMP-             Rs. 5625

Support 1-      Rs. 5580, Support 2-       Rs.5300

Resistance 1- Rs. 5910, Resistance 2-   Rs.6175

Refer to the chart below. We can see that Britannia has trended upwards pretty consistently, and the corrections, which might have seemed scary in the past, seem trivial in hind-sight. 

It is one of those rare buy & hold stocks that grandparents bought and forgot and made their future generations very wealthy!

However, despite the amazing track record, even a stock as mind blowing as Britannia has not been spared the market correction that has stunned the Indian Capital Market due to a plethora of reasons. 

Britannia is currently 20% off from its highest price of Rs. 6934 and that is a lot of correction for a quality stock like Britannia which has grown at a 10 yr CAGR of 35%!

Britannia- Daily chart: Price has corrected nearly 20% from the top

So what's next?

I looked at the hourly chart and this is what I found :

Britannia Hourly chart: Positive divergence on RSI is a positive indication on a small time frame

The hourly chart of Britannia is showing a mild positive divergence between the RSI and price. This indicates that the momentum of correction is going to slow down. It may resort of consolidation before it resumes the uptrend. I am not betting on a very deep correction as the daily chart continues to remain quite healthy and the correction started off without a major negative divergence like in the case of Maruti's chart, which is also a star performer like Britannia but is in the deep red zone and has breached its 52-week low and its correction started of with a sever RSI negative divergence. 

I will look at the resistance level of 6175 because it presents the previous high, breaching which would be a continuation of the uptrend for me. But before that happens, I believe the stock will consolidate like it has done in the past following major corrections like this one. 

Britannia Daily, Covering a long range of price activity and RSI range Shift

The above chart shows the range shift activity of RSI, which has almost always given an early indication of the price behaviour. RSI has shifted it's range to correspond with the trend of price. Like in the uptrend, it maintained a range of 40-80 whereas in a downtrend/consolidation phase, it maintained a range of 20-60. 

Such a tell tale behaviour of RSI is astounding even though it happens across stocks and indices, it still leaves me in awe of this wonderful indicator. 

This phenomenon has been highlighted better in the chart below, wherein the uptrends in price have been shaded in green and the downtrend/consolidations have been shaded in red. We can clearly make out how the RSI accurately reflects the subdued momentum in price movements during cool periods and flares up when it starts trending again. RSI is rightly called a leading indicator.

Britannia Daily- RSI range shift accurately shows the price momentum 

As we see in the right most corner of the above chart, the RSI has recently shifted to the bear zone and this further strengthens my analysis that Britannia will continue to consolidate at this point. However, a move accompanied with heavy volumes below the support zone of 5380-5300 will be indication of continued correction, though I do not expect it to happen, but we have to keep an open mind and be ready for the unexpected.

If you would like to discuss any aspect of this analysis of Britannia, please feel free to reach out to me at kchamaria1993@gmail.com.

This is all for today! Do share this analysis with other stock market enthusiasts like you and me!

Adios!

Nifty 50 - A short analysis

Hello Readers!

Market is a house of mayhem as we know it right now. Even though today was a day to breath easy, I believe the worst is yet to come. 

Enjoy the read and do follow my blog by clicking on that blue 'follow' button at the right side of your screen!

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 An analysis of Nifty 50

Nifty has corrected nearly 880 points from the top of 11770, that is 7.5% so far and has recently forged a low of 10866 which is below the monumental psychological support of 11000. Yesterday, things got even worse as the index closed below the fatal 100 daily EMA. Today, despite the recovery it failed to cross back above the 100 EMA even on an intraday basis and this shows that the 100EMA is now working as a resistance area.

Nifty Daily- Captured on 25-09-2018. Correction expected to continue. 

Highlighted on the chart, I expect the correction in Nifty to continue for another 500 points or so. The support thereby lies in the range of 10575-10500. There are multiple reasons for drawing this conclusion, along will a few conditions for the success of this analysis.

Purely technical reasons for expecting continued correction:
1) Breach of the 100 day EMA on the daily chart
2) Breach of the level of 40 on daily RSI, which is a support zone for the indicator in a bullish market
3) Breach of 10880 on intraday basis which was a strong potential support zone due to several factors

Some macro reasons for expecting continuation of this correction:
1) Continued weakness of Rupee
2) Bullish crude oil charts (analysis to be presented in a separate post)
3) Increasing tensions of tradewar plus the U.S. sanctions on Iran's oil industry puts India under alot of pressure as the alternatives are costlier (Read more here) 
4) State oil companies may reduce inventory in the face of rising oil price. But because they only hold 7-8 days of oil inventory, reducing that level will only control cost for a very short time period and will instead lead to increased cost in the face of further increasing oil prices (read more here). This will hurt the economy and naturally push up the oil prices and the cost of fuel further, aggravating the pain. 

Condition to this analysis:
A close above the 35 EMA (11350) will be a potential continuation of the uptrend and end of correction as it is an important resistance zone, though very unlikely as per charts, but we have got to keep an open mind when it comes to the stock market.

That's a short and crisp analysis for you. I will be coming up with a more detailed analysis of Nifty soon. 
Here's a teaser: It will include the Elliot Wave count and I believe the correctionary A-B-C wave is underway. So stay tuned! 

I also intend to come up with posts on the following: 

1) Take a look at Britannia because your evening snack just got more attractive!

2) Follow-up on Balrampur Chini which continues to impress! 

Thank you for taking out the time to read my articles.

You can find my detailed  analysis on three stocks- BALRAMPUR CHINI,  FRETAIL and REC.  

As a disclaimer, this isn't a recommendation but a mere observation of a great phenomenon unfolding on the chart.
Another disclaimer: I am long on Balrampur Chini and REC Ltd (bought after the above article was posted).
A warning: Anyone investing in Balrampur Chini, OR ANY OTHER STOCK/INDEX,  based on this article is doing so at their own risk. Please be responsible.

After giving a 25% return in 3 weeks, what lies ahead for Balrampur Chini?

Hello readers!

Here’s another follow-up on the analysis of Balrampur Chini’s stock.

After our initial coverage of this stock on 24^th Aug(link here), it has already given a 25% run-up so far which I feels phenomenal.

But let us not forget that run up is just the beginning. The target lies much further ahead.

After two days of strong upside movement, the stock has dipped. Now, market participants will know it is nothing unnatural because profit taking is eminent after suck a sharp one sided move. But I want to emphasize here profit taking is all it is. The upside should continue going forward. The daily chart doesn’t give up much insight into the move as we can see below. It just shows RSI in the +60 zone which is a positive for the price movement. Another evidence of potential trend continuation comes from the volume on the last two days.

 

BALRAMPUR CHINI- daily chart captured on 18th sept, 2018. 

Let’s analyse the hourly chart to look deeper into the price movement.

The hourly chart below is showing good support present at the 35 hour EMA. I believe this acts a good entry point for those who missed the entry at the start of the trend. As Jesse Livermore has thought us we should always enter the bull trend at dips and this my friend is a good dip of 6% before the stock of Balrampur Chini paves its way to its ultimate target.

BALRAMPUR CHINI- Hourly chart captured on 18th Sept, 2018- Prices showing support at the 35EMA. 

That’s all for today. Please do read the original post here. I would love to hear from you. Please share your feedback via comments. You can also reach out to me directly via the contact me form. 

Thank you for taking out the time to read my articles.

You can find my analysis on two other stocks- FRETAIL and REC.  

As a disclaimer, this isn't a stock recommendation but a mere observation of a great phenomenon unfolding on the chart.

Another disclaimer: I am long on Balrampur Chini.

A warning: Anyone investing in Balrampur Chini based on this article is doing so at their own risk. Please be responsible.

Blog temporarily discontinued

Dear Reader,

This blog page has been dis-continued temporarily . However that does not mean I've stopped writing.

Kindly visit the website  http://www.elearnmarkets.com/blog/market/  and  http://www.elearnmarkets.com/blog/technical-analysis/  for various article which I have put together on different chart patterns, stocks, currencies etc, and a daily and weekly Market Wrap which states what moved the maket all day and all week.

I request you to please read what I write and criticise it to the best of your ability, let me know it all in the comment section or just email me at kchamaria1993@gmail.com :D