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Gladiator Stocks – Consumer Durables Thematic
Scrip I-Direct Code Action Target StoplossWhirlpool of India Ltd WHIIND Buy in the range of 1030-1050 1230.00 945.00Symphony Ltd SYMLIM Buy in the range of 1260-1300 1560.00 1120.00Johnson Controls Hitachi Air Conditioning HITHOM Buy in the range of 1365-1400 1645.00 1238.00Time Frame: 6 Months
Research AnalystsDh h Sh h dh h h h@i i i itiDharmesh Shah [email protected] Kunte (CMT) [email protected] Dagha [email protected] Mukherjee [email protected] Parmar [email protected]
February 27, 2017
Deal Team – At Your ServiceConsumer Durables Thematic: Warming up for summers...
• The best known indicator of seasonal progression is outdoor temperature. As the summer of 2017 isjust around the corner, we take a look at the price charts of some air conditioner stocks, whichappear to be warming up for a rally ahead of the summers when the demand for air conditioners(AC) really starts picking up Seasonality is defined as a pattern that occurs at given times within the(AC) really starts picking up. Seasonality is defined as a pattern that occurs at given times within thecalendar year. The reason we like to look at seasonality is because technical analysis is based on thepremise that price patterns repeat themselves and seasonality is rooted in this very same concept
• The air conditioner (AC) industry recorded a mixed Q3 performance wherein companies recorded acontraction in margin (200 bps YoY) led by higher discounts to dealers amid demonetisation. TheMay-July period (strong summer) is considered to be the strongest period for sales of AC andcontributes ~30% to overall annual sales. Considering the strong summer ahead, we believe volumegrowth of cooling products is expected to pick up as retailers have gradually started buildinginventories to meet seasonal demand from the south and north. This will also be supported by risingcash availability in system and recent pay hike (due to implementation of Seventh Pay Commission).
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Whirlpool of India (WHIIND): Resuming uptrend after steady base formation...
CMP | 1047 00 B i R |1030 1050 T t | 1230 00 St l | 942 00 U id 18%
Technical ViewThe share price of Whirlpool of India entered into a strong uptrend since bottoming out in September 2013 and,thereafter, has consistently remained in a rising trajectory over the last three years. The stock entered into a correctivephase after hitting a life-time high of | 1197 following the demonetisation drive in November 2016. Looking at the
t d l t th i h t b li th t k h l d d h lth ti h d i t t
Stock Data
CMP: | 1047.00 Buying Range: |1030-1050 Target: | 1230.00 Stop loss: | 942.00 Upside: 18%
52 Week High / Low 1197.90/588.3050 days EMA 969
200 days EMA 907recent developments on the price chart, we believe the stock has concluded a healthy corrective phase and is set toembark upon its next directional up move thereby providing a good entry opportunity for medium-term investors
Base formation at key value area ...The price decline in November–December 2016 got arrested precisely above the key value area of | 840 region. Thestock witnessed a steady base formation above the key value area by oscillating between broad range of | 1040 to |840 levels over the two months between December 2016 and January 2017. The base formation for over two monthshighlighted accumulation by stronger hands at the key value area of | 840 as it is the confluence of following technical
00 d ys 90
52 Week EMA 891
Face Value (|) 10Market Capitallisation (| Cr.) 13507
highlighted accumulation by stronger hands at the key value area of | 840 as it is the confluence of following technicalparameters:
Value of the long term rising 52-week EMA was then placed at | 845Previous major breakout area and yearly high of 2015 is placed at | 847 levels50% retracement of February-October 2016 rally (555-1197) placed at | 870 region
The stock has resolved higher from the two month base formation in the current month and also confirmed the DowTheory signal of higher high higher low formation on monthly scale by surpassing its December 2016 high of |1039
Stock price vs. BSE200
10,000
11,000
12,000
600700800900
1,0001,100
y g g g g y y p g gthereby signalling conclusion of corrective phase and resumption of primary uptrend. The stock has recently made ahigher bottom of |945 which coincides with the 50% retracement of last rising segment thereby making this a keysupport base for the stock going forward
Bullish crossover on MACD oscillator confirms reversal on price front...Among oscillators, the weekly MACD (E-12,26,9) has generated a positive crossover above its 9 period average afterrebounding from its trigger line. It highlights build of positive momentum and confirms strength in current up movePrice performance in last five years
9,000500600
Jan-
16Fe
b-16
Mar
-16
Apr
-16
May
-16
Jun-
16Ju
l-16
Aug
-16
Sep-
16Oc
t-16
Nov
-16
Dec-
16Ja
n-17
Feb-
17
Whirlpool BSE500
that augurs well for the stock going forward
ConclusionBased on the aforementioned technical observations, we believe the stock has concluded a healthy corrective phase.We expect the stock to enter a sustainable up move from here on and head towards our target of | 1230 levels overthe medium term as it is the 123.6% extension of the preceding up move (|839 to |1074) projected from recenthigher bottom of |945 levels thereby providing a good entry opportunity for medium term investors with favourablerisk / reward set up to ride the next up move
69%
-20%
206%
0%37%
-30%
70%
170%
2012 2013 2014 2015 2016Year risk / reward set-up to ride the next up move
Source: Bloomberg, BSE, ICICIdirect.com Research
3
Year
Whirlpool of India Ltd. (WHIIND) – Weekly Bar Chart
1197
Stock has concluded a healthy corrective phase and is set to embarkupon its next directional up move thereby providing fresh opportunity 123.6% extension at |1230
847
839
945
555
Base formation at key valuearea of |840:-Rising 52 week EMA-Previous breakout area
52-week EMA -50% retracement
Steady volumes during base formation highlight accumulation by stronger hands at key value area
Bullish crossover on MACD above its trigger line indicates build up of positive momentum
Source: Bloomberg, ICICIdirect.com Research
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Symphony (SYMLIM): At the cusp of resuming primary uptrend...
CMP | 1300 00 B i R |1260 1300 T t | 1560 00 St l | 1120 00 U id 22%
Technical ViewThe share price of Symphony, a leading producer of air coolers, witnessed a multi-fold rally between 2013 and 2015rallying from a low of | 131 in August 2013 to a life-time high of | 1637 in April 2015. After the humongous 11-foldrally in less than two years, the stock entered into a major consolidation phase in order to work off the extremely
t t h d ti t d l d ft th lti f ld i Th i i d ti i b h i f th t k
Stock Data
CMP: | 1300.00 Buying Range: |1260-1300 Target: | 1560.00 Stop loss: | 1120.00 Upside: 22%
52 Week High / Low 1465.95/975.0550 days EMA 1252
200 days EMA 1200overstretched sentiments developed after the multi-fold rise. The price wise and time wise behaviour of the stockduring the prolonged consolidation phase over the last two years exhibits all the traits of a healthy corrective phasewithin the larger uptrend. We believe the extended corrective phase has approached maturity and the placement ofthe share price near key value area provides good investment opportunity for the medium term horizon.Multi-month consolidation post multi-fold rally provides platform for next major up move...The price wise correction from April 2015 life time high (| 1637) concluded in just five months as the stock made abottom of | 825 in August 2015. Thereafter, the stock was witness to elongated time wise correction over the last two
y
52 Week EMA 1188
Face Value (|) 2Market Capitallisation (| Cr.) 9022
*Recommendation given on i-click to gain on February27, 2017 at 9:28 hrs
years. The price wise bottom formed in August 2015 rests at the key value area of around | 800 region as it is theconfluence of:
Value of the long term rising 21-month EMA was then placed at | 79550% retracement of the entire 2013 to 2015 multi-fold bull run is placed at | 880 regionMonthly low of December 2014 is placed at |820 levels
Time wise the multi-fold bull run in 2013-15 occurred in 21 months while the stock has already spent 22 months under
Stock price vs. BSE 500
10,000
11,000
12,000
1,000
1,100
1,200
1,300
corrective phase from April 2015 till date. While the price wise decline got anchored near the 50% retracement of themajor bull run, the corrective phase has achieved time wise equality with the time consumed during the major bullrun. Limited price wise correction and elongated time wise consolidation forms the key ingredients of a healthycorrective phase within the larger bull trend. Based on these observations, we believe that the secondary correctivephase has approached time wise and price wise maturity and the stock is set to resume its primary uptrend therebyproviding good investment opportunity from a medium term perspective to ride the next major up move.
Momentum oscillator confirms inherent strength in the trend...Price performance in last five years
9,000900
,000
Jan-
16Fe
b-16
Mar
-16
Apr
-16
May
-16
Jun-
16Ju
l-16
Aug
-16
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t-16
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-16
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n-17
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Symphony BSE500
o e tu osc ato co s e e t st e gt t e t e dAmong oscillators, the monthly 14 period RSI has sailed above its bull market support reading of 55 during the entirecorrective phase over the last two years highlighting inherent strength in the underlying trend and confirms the overallbullish price structure.ConclusionBased on the aforementioned technical observations, we believe the stock is at the cusp of resuming its primaryuptrend after conclusion of the secondary. We expect the stock to resolve higher from here on and head towards ourt t f |1560 th di t it i th i i li ti f l t ’ b f ti
25% 32%
358%
19% 0%-30%
170%
370%
2012 2013 2014 2015 2016Year target of |1560 over the medium term, as it is the measuring implication of last one year’s base formation range
(|1315 to |1070) projected from the breakout point of |1315 thereby providing a favourable risk/reward set up formedium term investors to ride the next up move.Source: Bloomberg, BSE, ICICIdirect.com Research
5
Year
Symphony (SYMLIM) – Monthly Bar Chart
1637
Stock has approached time wise and price wise maturity of majorcorrective phase and presents good investment opportunity
1315
Measuring implication of one yearbase formation range at |1560
22 Monthconsolidation
1315
1070
820
Price wise correction halted at keyvalue area of |820 :
21 Month Rally
consolidation
131
21 Month EMA
value area of |820 :-Rising 21 Month EMA-50% retracement of 2013-2015 bull run-Monthly low of December 2014
14 Month RSI has sailed above its bull market support of 50-55 reading during entire two year corrective phase
Source: Bloomberg, ICICIdirect.com Research
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Johnson Control Hitachi Air Conditioning (HITHOM): Consolidating at support level..
CMP | 1394 00 B i R |1365 1400 T t | 1645 00 St l | 1238 00 U id 19%
Key technical observationsThe Johnson Control Hitachi Air Conditioning is a joint venture company of Johnson Controls (JCI) and HitachiAppliances. The share price has shunned the limelight in the last two years as it entered a consolidation phase aftergalloping returns during December 2013 and June 2015. The stock is currently at an attractive price near its key value
f i Th f i ff d i k d f di i id h
Stock Data
CMP: | 1394.00 Buying Range: |1365-1400 Target: | 1645.00 Stop loss: | 1238.00 Upside: 19%
52 Week High / Low 1678/930.5050 days EMA 1402
200 days EMA 1396area after recent correction. Therefore, it offers decent a risk-reward set-up to for medium-term investors to ride thepotential up move .Consolidating in a major long term Triangular pattern augurs wellThe stock witnessed a strong multi-fold rally during December 2013 and June 2015, rallying from | 113 to the life-timehigh of | 1734. After the stupendous rally in just 18 months, the stock went into hibernation mode over the next 21months to work off the overbought sentiments. The entire corrective price action over the last 21 months has takenthe form of a Triangular consolidation pattern. A triangle pattern occurs as a bullish continuation pattern within an
*Recommendation given on i-click to gain on February23, 2017 at 15:25 hrs
200 days EMA 1396
52 Week EMA 1378
Face Value (|) 10Market Capitallisation (| Cr.) 3739
g p g p pestablished uptrend marking a pause after a strong rally. The stock is currently attractively placed at the lower end ofthe triangular consolidation pattern as can be seen in the adjacent chart.
The long term 52 weeks EMA has been a major support for the stock during the entire corrective consolidation phaseas the stock during multiple occasion rebounded taking support near the long term average. In the last three months,the stock has been consolidating around the long term average, which also coincides with the lower base of thetriangular consolidation pattern indicating major value area for the stock.Key price and time internals during consolidation substantiate robust price structure
Stock price vs. BSE 500
10,000
11,000
12,000
1,180
1,380
1,580
Key price and time internals during consolidation substantiate robust price structureTime wise, the multi-fold rally in 2013-15 occurred in 19 months whereas the stock has already spent almost 21months in a corrective phase while forming the Triangular pattern. The price wise correction halted near the 50%retracement of the 2013-15 rally around the | 930 region. Based on this observation, we believe the current correctivedecline has approached price wise and time wise maturity and the stock provides good entry opportunity from amedium term perspective with a favourable risk/reward set up to ride the next up move.Momentum oscillators placed at major long term support areaPrice performance in last five years
9,000980
Jan-
16Fe
b-16
Mar
-16
Apr
-16
May
-16
Jun-
16Ju
l-16
Aug
-16
Sep-
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t-16
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-16
Dec-
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JCHAC BSE500
Among oscillators, the weekly stochastic is currently placed at an oversold territory near its previous major lows ofJune and November 2016, where as the weekly 14 period’s RSI is currently placed near the major trendline support ofits own joining previous lows. The momentum oscillators placed near its major support level and sustaining above thesame indicates waning downward momentum and signals a possible reversal of the trend.ConclusionWe believe the stock has concluded a healthy consolidation phase within the established uptrend and is set to embarkupon the next up move over the medium term The minimum price objective for a move to challenge the upper
54% 5%
470%
53% 1%-30%
170%
370%
2012 2013 2014 2015 2016Y upon the next up move over the medium term. The minimum price objective for a move to challenge the upper
boundary of the major Triangular consolidation pattern formed by joining the 2015 and 2016 peaks projects upsidestowards |1645 region over the coming monthsSource: Bloomberg, BSE, ICICIdirect.com Research
7
Year
Johnson Control Hitachi Air Conditioning (HITHOM) – Weekly Bar Chart
Retest of the upperboundary of Trianglepatter @ 1645
Stock witnessing a Triangular consolidation after theprevious sharp rally signals positive price structure
17341678
930
1144
930
Consolidation at the major value area:- Lower boundary of the triangular
consolidation pattern- Long term 52 weeks EMA
52 Weeks EMA
113
Weekly 14 period RSI placed near the trendline support of its own
Weekly Stochastic in oversold territory and placed near previous lows
Source: Bloomberg, ICICIdirect.com Research
8
Strategy Follow up
Open Recommendations:
Date Scrip Name Rec Price Target Stoploss CMPReturn till date
(%)30 J 17 255 298 233 5 8 2%30-Jan-17 Marico 255 298 233.5 276 8.2%
S P f R d ti till d t O R d ti 1Summary Performance - Recommendations till date Open Recommendations 1
Total Recommendations 117 Yield on Positive recommendations 19.0%Closed Recommendations 116 Yield on Negative recommendations -8.0%
Positive Recommendations 81Strike Rate 70%
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Notes…
• It is recommended to enter in a staggered manner within the prescribed range provided in the report
• Once the recommendation is executed, it is advisable to keep strict stop loss as provided in the report on closing basis.
• The recommendations are valid for six months and in case we intend to carry forward the position, it will be communicated through separate mail.
Trading portfolio allocationTrading portfolio allocation
• It is recommended to spread out the trading corpus in a proportionate manner between the various technical research products
• Please a oid allocati g the e ti e t adi g co p s to a si gle stock o a si gle p od ct • Please avoid allocating the entire trading corpus to a single stock or a single product segment
• Within each product segment it is advisable to allocate equal amount to each recommendationF l Th ‘D il C ll ’ d i 3 i d d i I i • For example: The ‘Daily Calls’ product carries 3 to 4 intraday recommendations. It is advisable to allocate equal amount to each recommendation
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Recommended product wise trading portfolio allocation
Duration
Daily Calls 8% 2-3% 3-4 Stocks 0.5-1% 2-3% Intraday
Number of CallsReturn Objective
Frontline Stocks Mid Cap StocksProduct Product wise
allocation
AllocationsMax allocation in
1 Stock
Stocks on the Move 6% 3-5% 7-10 Per Months 7-10% 10-15% 3 Months
Weekly Calls 8% 3-5% 1-2 Stocks 5-7% 7-10% 1 Week
Weekly Technicals 8% 3-5% 1-2 Stocks 5-7% 7-10% 1 Week
Monthly Call 15% 5% 2-3 Stocks 7-10% 10-15% 1 Month
Monthly Technical 15% 2-4% 5-8 Stocks 7-10% 10-15% 1 Month
Techno Funda 15% 5-10% 1-2 Stocks 10% and above 15% and above 6 Months
Gladiator Stocks 15% 5 10% 1 2 Stocks 15% and above 20% and above 6 MonthsGladiator Stocks 15% 5-10% 1-2 Stocks 15% and above 20% and above 6 Months
Cash 10% -100%
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Pankaj Pandey Head – Research [email protected]
ICICIdirect.com Research Desk,ICICI Securities Limited,1st Floor Akruti Trade Centre1st Floor, Akruti Trade Centre,Road No 7, MIDCAndheri (East)Mumbai – 400 [email protected]
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DisclaimerANALYST CERTIFICATION
We /I Dharmesh Shah Dipesh Dagha Nitin Kunte Pabitro Mukherjee Vinayak Parmar Research Analysts authors and the names subscribed toWe /I, Dharmesh Shah, Dipesh Dagha, Nitin Kunte, Pabitro Mukherjee, Vinayak Parmar Research Analysts, authors and the names subscribed tothis report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) orsecurities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) orview(s) in this report.Terms & conditions and other disclosures:ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stockbrokering and distribution of financial products. ICICI Securities Limited is a SEBI registered Research Analyst with SEBI Registration Number –g p g y gINH000000990.ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has its varioussubsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management,etc. (“associates”), the details in respect of which are available on www.icicibank.comICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India.We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by ourInvestment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from
i i i fi i l i i h i i d i i f i h h lmaintaining a financial interest in the securities or derivatives of any companies that the analysts cover.The information and opinions in this section have been prepared by ICICI Securities and are subject to change without any notice. The report andinformation contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to,copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICISecurities. While we would endeavour to update the information herein on reasonable basis, ICICI Securities is under no obligation to update orkeep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicablerated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicableregulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or incertain other circumstances.The research recommendations are based on information obtained from public sources and sources believed to be reliable, but no independentverification has been made nor is its accuracy or completeness guaranteed. These research recommendations and information herein is solely forinformational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities orother financial instruments. ICICI Securities will not treat recipients as customers by virtue of their receiving these recommendations. Nothing inthis section constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriateto your specific circumstances. The securities discussed and opinions expressed herein may not be suitable for all investors, who must maketheir own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not betaken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks.The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securitiesaccepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of these recommendations. Past performance is notnecessarily a guide to future performance Investors are advised to see Risk Disclosure Document to understand the risks associated before
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necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated beforeinvesting in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are notpredictions and may be subject to change without notice.
DisclaimerICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have beenmandated by the subject company for any other assignment in the past twelve months.ICICI Sec ities o its associates ight ha e ecei ed a co pe satio f o the co pa ies e tio ed he ei d i g the pe iod p ecedi gICICI Securities or its associates might have received any compensation from the companies mentioned herein during the period precedingtwelve months from the date of these recommendations for services in respect of managing or co-managing public offerings, corporate finance,investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchantbanking or brokerage services from the companies mentioned herein in the past twelve months.ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICISecurities or its associates or its Analysts did not receive any compensation or other benefits from the companies mentioned in the report or thirdSecurities or its associates or its Analysts did not receive any compensation or other benefits from the companies mentioned in the report or thirdparty in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives haveany material conflict of interest at the time of publication of this reports.It is confirmed that Dharmesh Shah, Dipesh Dagha, Nitin Kunte, Pabitro Mukherjee and Vinayak Parmar, Research Analysts giving theserecommendations have not received any compensation from the companies mentioned herein in the preceding twelve months.Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactionsICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the
/ i i d h i f h l d f h h di h bli i f h h d icompany/companies mentioned herein as of the last day of the month preceding the publication of these research recommendations.Since Associates (ICICI group companies) of ICICI Securities are engaged in various financial service businesses, they might have financialinterests or beneficial ownership in various companies including the subject company/companies mentioned herein.It is confirmed that Research Analysts do not serve as an officer, director or employee or advisory board member of the companies mentionedherein.ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented herein.Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned hereinNeither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned herein.We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysisactivities.This report or recommendations are not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of orlocated in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securitiesdescribed herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession thisdocument may come are required to inform themselves of and to observe such restriction.
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