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Research Analyst:Dharmesh Shah Nitin Kunte, CMT Ninad Tamhanekar [email protected] [email protected] [email protected]
Pabitro Mukherjee Vinayak [email protected] [email protected]
20202020Yearly
Technical OutlookYearly
Technical Outlook
BUYSBI
|305-33028%
33% 24%
31%
19%
BUYHindalco|205-215
BUYSBI Life|925-980
31%
38%
BUYPersistent
System|645-685
BUYRPG Life|300-325
BUYGodfrey Philips
|1200-1320
BUYPNC Infra|189-196
TOP PICKS: CY20TOP PICKS: CY20
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Domestic equity benchmarks scaled life-time highs, in the process, absorbing a host of domestic and global concerns, indicating a robustness in price structure. For many
Investors, though, it has been a mixed bag experience, as broader participation is still missing.
Our three-pronged approach reveals, a secular bull market is ahead of us, as midcaps are at the cusp of a new uptrend. Therefore, investors should align/construct their long
term portfolios to benefit from changing market dynamics with incremental weightage on quality midcaps
Our prognosis for the Nifty, is based on a projection from two year consolidation pattern implying target @ 14000 levels that is concurrent with our bottom-up approach. The
two baskets of Nifty constituents, a) Outperformer stocks and b) Bargain Buy stocks, command total weightage of 73%. They are expected to generate returns in excess of 20%
each, thus corroborating our bullish stance, derived from empirical studies.
Scrip I-Direct Code Buying Range Target Stop loss Upside%
State Bank of India STABAN 305-330 405 267 28%
SBI Life Insurance Co. SBILIF 925-980 1,180 820 24%
Hindalco Industries HINDAL 205-215 250 185 19%
Godfrey Phillips India GODPHI 1200-1320 1,740 990 38%
RPG Life Sciences RPGLIF 300-325 410 258 31%
PNC Infratech PNCINF 184-196 249 158 31%
Persistent Systems PERSYS 645-685 890 545 33%
Technical Strategy CY19 Performance
No. of recommendations Avgerage Strike Rate
7 18% 71%
Polarisation to secular up move, midcaps at cusp of new bull trend
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 1
Technical Outlook for 2020
Technic
al S
trategy –
2020
Click here to know more..Source: Bloomberg, ICICI Direct Research
Top Picks: CY20 (Time frame: 12 months)
57 56
44
27
4
4649
30
17
30
2532
21
6
32
-6
59
32
3
124
3842 41
0
-15
5
25
45
65
85
105
125
145
2003-04 2009-10 2012-13 2016-17 2019 - 20
Returns in %
Performance post Breadth signal
Market Breadth: One year forward return
US Europe China Japan India
Cyclicals to outperform
Our bottom up thesis for stock selection from a larger universe of stocks
reveals interesting sectoral setups
Outperformers: Banking, Capital goods, Metals and Telecom
Market Performers: IT, Consumer Discretionary, Pharma, Infrastructure
Neutral: Auto, Consumer Staples
Midcaps to rule the roost.
Our three-pronged approach reveals, a secular bull market is ahead of us, as midcaps
are at the cusp of a new uptrend. Therefore, investors should align/construct their long
term portfolios to benefit from changing market dynamics with incremental weightage
on quality midcaps.
Indian midcaps enjoy consistent positive correlation with global peers, with the
latter being a lead indicator. As US and European midcap indices are touching new
life-time highs after two year hibernation, empirical evidence favours Indian
midcaps following in their footprint
Nifty Midcap index is at the cusp of a breakout from a well defined falling channel
encompassing past two years price action, which will be a classic bull market signal
Market Breadth, as measured by percentage of stocks above long term 200 day
moving average, has acted as key determinant for forward returns. Indicator turning
above 50, has led to a one year return averaging 40% of for Indian midcap index,
over the past four major bull phases, across two decades
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Asian
Paints
Axis
Bank
Bajaj
Auto
Bajaj
Finserv
Bajaj
Finance
Bharti
Airtel
BPCL
Dr. Reddy's
Eicher
Motors
HDFC
HDFC
Bank
Hero
MotoCorp
Hindalco
HUL
IndusInd
Bank
Infosys
IOC
ITC
JSW
Steel
Kotak
Bank
L&T
M&M.
Maruti
Nestle
SBI
Sun
Pharma Tata
Motors
Tata
Steel
TCS
Titan
UltraTech
Wipro
10
20
30
40
50
60
70
80
4% 9% 14% 19% 24% 29% 34% 39%
Breadth
Expected Return %
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 2Source: Spider Software, nseindia.com, ICICI Direct Research
Nifty @ 14000, cyclicals to lead
Click here to go to top
Notes:
• Y-Axis: The summation of the weekly positive candle and number of weeks closing above 52 weeks SMA in each of Nifty constituents.
• X-Axis: The expected return of the Nifty Constituents
Market Performer
The size of the bubble is the product of breadth and expected price performance
Neutral Bargain Buy
Outperformer Stocks from Outperformer and Bargain
Buy quadrants, commanding total
weightage of 74% are expected to
deliver average returns in excess of 20%
Category
No. of
Stocks
Aggregate
WeightageSectors
Projected
Avg.
Returns
Contribution
to Nifty
(points)
Nifty Target 14210
1067
Neutral 8 12% Auto, Pharma 10% 832
Market
Performer8 14% IT, Power 11%
10980
Bargain Buy 14 8% Metals, Energy 24% 1331
Outperformer 20 66%
BFSI, Telecom, Capital
Goods, Consumption24%
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 3Source: Bloomberg, ICICI Direct Research
Top down chart work also validates Nifty@14000
Pattern implication of two year range
breakout (12000-10000) and upper
band of channel @ 14000-14200
6338
9119
Key long term support @ 10400-10600:
long term trend line support joining
major lows since 2011
80% retracement of October 2018-
June 2019 rally at 10424
4531
6825
Nifty: Monthly Bar Chart
Click here to go to top
11760
10005
12103
10637
Nifty Index: Rally's post major corrections since 2008
In last decade, each 12–
15% correction, is followed
by average returns of 22%
On multiple occasions index
found strong support in vicinity
of 21 months EMA
Correction
From To (%)
Jun'09 Jul'09 17 21
Jan'10 May'10 12 12
Nov'10 Dec'11 29 24
Feb'12 May'12 15 28
May'13 Aug'13 18 24
Mar'15 Feb'16 25 31
Sep'16 Dec'16 12 28
Jan'18 Mar'18 11 18
Sep'18 Oct'18 15 21
Jun'19 Aug'19 12
Average excluding 2010 and 2015 14 22
Subsequent
rally (%)
Time
Monthly MACD logged bullish crossover, indicating acceleration of upward momentum
Target @
14000
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 4Source: Bloomberg, ICICI Direct Research
Indian midcaps to follow global peers higher…
Russell Midcap Index / Nifty Midcap 100
Click here to go to top
STOXX Europe Mid 200 / Nifty Midcap 100
Shanghai Shenzhen CSI 300 / Nifty Midcap 100
TOPIX Mid 400 / Nifty Midcap 100
Indian midcaps have favourable correlation with global midcaps over two decades, with later being lead indicator
US and European midcap indices embracing life-time highs after two year hiatus. Indian midcaps to follow…
U.S.
Europe
Japan
China
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400
5400
10400
0
20
40
60
80
100
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
% of stocks above 200 SMA NSE 500
100
600
1100
1600
2100
2600
0
20
40
60
80
100
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
% of stocks above 200 SMA TOPIX Mid 400
100
2100
4100
6100
0
20
40
60
80
100
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
% of stocks above 200 SMA Shanghai Shenzhen CSI 300
100
200
300
400
500
600
0
20
40
60
80
100
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
% of stocks above 200 SMA STOXX Europe Mid 200
400
900
1400
1900
2400
2900
0
20
40
60
80
100
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
% of stocks above 200 SMA Russell Midcap Index
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 5Source: Bloomberg, ICICI Direct Research
..as breadth signals impending bull phase…
Click here to go to top
U.S.
Europe
Japan
China
India
• Orange shaded area signifies breadth crossing key threshold (50) for
first time in CY19 for India, providing impetus to the strong rally
• Developed markets have already crossed the threshold, in CY19,
thereby allowing US and European indices to new life-time highs
Global Midcap Indices
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 6Source: Bloomberg, ICICI Direct Research
...complemented by conventional chart work
Target at 61.8%
retracement and
February 2018 high
is @ 20400
14238
Major long term support area around
15000 as it is:
long term trend 50 months EMA
is placed at 15555
61.8% retracement of 2016-18
rally at 15258
August low is placed at 14975
6330
11190
Nifty Midcap: Monthly Bar Chart
Click here to go to top
21840
61.8% retracement
@ 15260
23 months
correction
22 months
rally
6030
9853
18463
50 Months
EMA
Shallow price correction along with elongated time consolidation, signifies
robust price structure, auguring well for next leg of up move
The index is at the cusp of recording a resolute breakout from long term
falling channel. This indicates conclusion of corrective bias, in turn,
suggesting resumption of primary up trend
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ABFRL
Apollo
Hosp
Apollo
Tyres
AUBank
Balkrishna
Ind
Bata India
BEL
Bharat Forge
CESC
Chola Fin
CUB
Escorts
Exide
Godrej Prop
IDFC First
Indian Hotel
Ipcal Lab
Jubl. Food
LIC Housing
L&T Infotech
M&M Fin
Max Fin
MGL
Mindtree
Info Edge
PfizerPrestige Estates
Ramco
Cement
Nippon Asset
SUNTV
Tata Chem
Tata Global
Tata Power
Torrent
Pharma
Torrent Power
UnionBank
Voltas
10
20
30
40
50
60
70
80
90
1% 6% 11% 16% 21% 26% 31% 36% 41% 46%
Breadth
Expected Return %
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 7Source: Spider Software, nseindia.com, ICICI Direct Research
Nifty Midcap: chips indicating bullish undertone
Click here to go to top
Notes:
• Y-Axis: The summation of the weekly positive candle and number of weeks closing above 52 weeks SMA in each of Nifty constituents.
• X-Axis: The expected return of the Nifty Constituents
Market Performer
The size of the bubble is the product of breadth and expected price performance
NeutralBargain Buy
Outperformer Stocks from Outperformer and
Bargain Buy quadrants, are
expected to deliver average
returns in excess of 20%
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BEML
BLUE
Star
Century
Ply
DCB
Bank
Deepak
Nitrite
EID
Parry
Equitas
Holdings
Godfrey
Phillips
IDFC
JK
Cement
JK Lakshmi
Kajaria
Ceramics
Kalpataru
Power
Karur
Vysya
Bank
KEC
Lal Path
Labs
Lemon
Tree
Linde
India
Lux
Industries
MCX
NCC
NIIT
Tech
Persistent
Systems
PVR
Radico
Khaitan
PNC
Infra
Raymond
Sonata
Software
Strides
Pharma
Tata
Elxsi
Timken
India Ujjivan
Financial
10
20
30
40
50
60
70
80
5% 10% 15% 20% 25% 30% 35%
Breadth
Expected Return %
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 8Source: Spider software, nseindia.com, ICICI Direct Research
Nifty Small cap: Emergence of new uptrend
Click here to go to top
Notes:
• Y-Axis: The summation of the weekly positive candle and number of weeks closing above 52 weeks SMA in each of Nifty constituents.
• X-Axis: The expected return of the Nifty Constituents
Market Performer
The size of the bubble is the product of breadth and expected price performance
NeutralBargain Buy
Outperformer Stocks from Outperformer and
Bargain Buy quadrants, are
expected to deliver average
returns in excess of 20%
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 9Source: Bloomberg, ICICI Direct Research
Bank Nifty : Two years consolidation breakout augurs well for acceleration of upward momentum…
Target @ 37500 being
138.2% extension
26560
Major long term support @ 29000:
long term upward sloping trend
line @ 28900
61.8% retracement of past three
month’s rally at 28700
23605
Bank Nifty: Monthly Bar Chart
Click here to go to top
27652
Monthly RSI oscillator pointing upward while sustaining above its nine period average, indicating positive bias
8367
20908
31784
21 months EMA has always
offered a fresh entry opportunity
from a long term prospective
Two years consolidation breakout signifies resumption of
primary up trend, boding well for next leg of up move
towards 37500 in coming year
13407
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 10
Top Picks CY20
Click here to go to top
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State Bank of India (STABAN): At the cusp of multi-year triangle breakout…
Monthly Bar chart
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 11Source: Bloomberg, ICICI Direct Research
352
89
145
Key long term support is at | 267:
• Long term upward sloping trend line @ | 270
• 21 quarters EMA @ | 273
• 50% retracement of 2016-19 rally @ | 261
The stock is on the verge of resolving out of long
term (10 years) Ascending Triangle breakout
signaling structural improvement, auguring well for
next leg of up move towards | 405 being 123.6%
external retracement of 2010-13 decline
Rec. Price 305.00-330.00 Target 405.00 Stop loss 267.00 Upside 28% Time Frame 12 Months
Quarterly MACD is inching northward, indicating acceleration of upward momentum
351
148
244
Highest quarterly volumes in past 15 years
Quarterly Bar ChartTarget
@ |405
21 quarters EMA has always
offered a fresh entry opportunity
from long term prospective
Initiated on i-CLICK-2-GAIN on 19th
December 2019 at 11:07 hours
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SBI Life Insurance Company (SBILIF): Upward sloping channel signifies robust price structure..
Monthly Bar chart
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 12Source: Bloomberg, ICICI Direct Research
777
Target @ | 1180
775
515
Key long term support at 820:
• 80% retracement of September-
October rally @ | 828
• October low is placed @ | 804
Multi-year resistance breakout
Rec. Price 925.00-980.00 Target 1180.00 Stop loss 820.00 Upside 24% Time Frame 12 Months
Weekly Stochastic is sustaining above its 3 period average, indicating positive bias
1030
635
862
Rising Volumes
Weekly Bar Chart Higher base formation at lower band of upward sloping channel (on the
back of strong volumes) has set the stage to challenge the upper band
of channel placed at | 1180 coinciding with price parity of September-
October rally, projected from November low is placed at | 1177
916
820
Initiated on i-CLICK-2-GAIN on 19th
December 2019 at 11:15 hours
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Hindalco (HINDAL): Corrective phase approaches maturity…
Monthly Bar chart
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 13Source: Bloomberg, ICICI Direct Research
80% retracement of previous
decline (| 267-171) @ | 250
284
171
A higher base formation at major support area of
| 170-175 being the confluence of :
- 50% retracement of previous rally (| 59 -284)
- Previous breakout area of March ‘17
A falling channel breakout containing last two years price action suggests
end of corrective phase and resumption of fresh up trend
Rec. Price 205.00-215.00 Target 250.00 Stop loss 185.00 Upside 19% Time Frame 12 Months
Monthly 14 periods RSI has generated buy signal
Initiated on i-CLICK-2-GAIN on 19th
December 2019 at 11:25 hours
267
59
177
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Godfrey Phillips India (GODPHI): Faster retreatment of major falling segment signals resumption of up trend….
Monthly Bar chart
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 14Source: Bloomberg, ICICI Direct Research
1662
Measuring implication of double
bottom breakout @ | 1740
1209
800
- Price rebounded taking support at the lower band of the rising channel in placed since CY05
- Formation of Double Bottom at support area of | 675
- Faster retracement as four months decline completely retraced in just three months
- A breakout from the falling channel containing last four years price decline
Above technical parameters highlights a structural turnaround and resumption of fresh up trend
Rec. Price 1200.00-1320.00 Target 1740.00 Stop loss 990.00 Upside 38% Time Frame 12 Months
Monthly MACD in up trend taking support at its nine periods average
Initiated on i-CLICK-2-GAIN on 19th
December 2019 at 10:54 hours
333
122
Double Bottom
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RPG Life Sciences (RPGLIF): Rising out of hibernation
Monthly Bar chart
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 15Source: Bloomberg, ICICI Direct Research
Measuring implication of the
range breakout @ | 410
610
288
The stocks retraced 11 months
decline in just three months. A
faster retracement signals
structural turnaround
Price breakout above 14 months consolidation range (| 288-152)
supported by strong volume and a faster retracement signals structural
change in trend
Rec. Price 300.00-325.00 Target 410.00 Stop loss 258.00 Upside 31% Time Frame 12 Months
Monthly MACD generated buy signal
Initiated on i-CLICK-2-GAIN on 19th
December 2019 at 10:47 hours
119
Rising Volume at breakout area
80% retracement of
previous major rally
(| 45-610) at 152
45
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PNC Infratech (PNCINF): Cusp of bullish Cup & Handle breakout….
Weekly Bar chart
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 16Source: Bloomberg, ICICI Direct Research
125
Price parity of previous rally (| 125-219) from
recent trough of 159 projects upside towards | 253
228
99The base of the Cup & Handle pattern is placed at the major support
area signalling robust price structure
- Long term trendline support joining lows since CY15
- 80% retracement of the entire previous rally | 100-228
Neckline @ 210
The stock is at the cusp of a bullish Cup & Handle pattern suggests
a structural change in favour of bulls
Rec. Price 184.00-196.00 Target 249.00 Stop loss 158.00 Upside 31% Time Frame 12 Months
Weekly MACD has generated a buy signal
Initiated on i-CLICK-2-GAIN on 19th
December 2019 at 12:17 hours
159
219
70
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Persistent Systems (PERSYS): Faster retracement bodes well to challenge upper band of long term channel…
Monthly Bar chart
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 17Source: Bloomberg, ICICI Direct Research
468
Target at upper band of long
term channel @ 900 960
Key long term support at | 585:
• 50% retracement of current up
move @ | 584
• Lower band of channel@ |550
• November low @ | S583
Rec. Price 645.00-685.00 Target 890.00 Stop loss 545.00 Upside 33% Time Frame 12 Months
Monthly RSI is in a rising trajectory, thereby validating positive bias
696
575
536
Rising Volumes
Monthly Bar Chart
Stock has entirely retraced preceding nine
months correction in just four months, indicating
faster retracement at lower band of long term
channel that signifies structural turnaround,
paving the way to challenge upper band of
channel @ | 900
915
Initiated on i-CLICK-2-GAIN on 19th
December 2019 at 14:48 hours
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 18
Commodity and Currency Outlook
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Gold ($1478): Consolidation likely in range of $1585-1375
Monthly Bar chart
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 19Source: Bloomberg, ICICI Direct Research
1921
Change of Polarity previous breakout area is
expected to act as support placed at $ 1375
1046
1160
61.8% retracement of entire
decline ($ 1921-1046) @ $
1585
2001-11
multifold rally
Gold prices after last year’s sharp rally have approached overbought
territory. Hence, consolidation is likely in the coming year in the broad range
of $1585-1375
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Brent ($66): Upsides capped…
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 20Source: Bloomberg, ICICI Direct Research
86
116
147
Brent prices
have major
hurdle around
$73-75 levels
Confluence of multiple
retracement and August
low around $55 makes
it a major support in
medium term
Monthly MACD in downtrend validating corrective bias in the Brent prices
Upside appears to be capped in Brent prices and is expected to
oscillate in the broad range of $55-75 in the medium term
Monthly Bar Chart
27
75
55
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LME Aluminium ($1755): Corrective phase approaches maturity…
Monthly Bar chart
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 21Source: Bloomberg, ICICI Direct Research
1251
1424
2772
3292
Monthly MACD placed near previous major low of CY 2016
The corrective decline of the last two years is approaching maturity as prices
forming higher bottom near the major support area of $1700. We expect
aluminium prices to witness a pullback in the coming year towards $2150 levels
Major support @ 1650-1700
- 80% retracement
- Long term trendline support
50%
retracement
@ 2150
2602
1705
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LME Copper ($ 6145): Attractively poised above long term value area…
Monthly Bar chart
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 22Source: Bloomberg, ICICI Direct Research
2768
7323
4310
10179
A slower retracement of the last rising segment as it has already taken eight
quarters to retrace just 61.8% of the previous eight quarters up move (4310-
7323) signalling positive price structure
Price rebounding from long term
trend line support signals
resumption of fresh up move after
two years of underperformance
5536
80%
retracement @
$ 6980
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Rupee (71.00): Consolidation in range of 67-74 likely...
Monthly bar chart (Inverted scale)
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 23Source: Bloomberg, ICICI Direct Research
52.2
39.2
68.8
43.8
Since CY04, the rupee has consolidated for two years after a sharp
depreciation in a pre-election year as seen in 2004-05, 2009-10 & 2014-15.
The same rhythm has played out in CY19 and is likely to continue in CY20.
We expect it to consolidate in the broad range of 67-74 in CY20
Key hurdle at 67 levels
- Rising trendline joining
lows since 2012
- Recent breakdown area
- 61.8% retracement of
previous decline (63.20-
74.45)
Key support at 74
Consolidation
during 2004 &
2005 post General
Election
Consolidation
during 2009 &
2010 post
General Election
Consolidation
during 2014 &
2015 post
General Election
68.8
63.2
46.548.2
The medium term trend in the rupee remains positive. Hence,
we expect it to appreciate towards the key hurdle area of 67.
Level of 74 remains a key support for CY20
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 24Source: ICICI Direct Research
Performance Scorecard
Click here to go to top
Yearly Technical Recommendation 2019 follow up
Rec. Date Stocks Recommended Rec Price (|) Target (|) Stoploss (|) % Profit/Loss Comment
21-Dec-18 Axis Bank 630 820 569 30.0 Target Achieved
21-Dec-18 Britannia 3125 3790 2740 -11.0 Exit at 2758.00
21-Dec-18 Abbott India 7400 9368 6380 17.0 Booked profit at 8610
20-Dec-18 VOLTAS 565 688 497 22.0 Target Achieved
21-Dec-18 TVS Motors 580 720 495 -14.0 Stoploss triggered
21-Dec-18 JSW Energy 70 96 56 10.0 Booked profit at 77
20-Dec-18 ABFRL 200 263 163 12.0 Booked profit at 223
23%
27%
33%
25%
28%26%
18%
Average Strike Rate of
last 7 years
77%
0
20
40
60
80
100
10
15
20
25
30
35
2013 2014 2015 2016 2017 2018 2019
Strik
e R
ate (%
)
Avg. R
eturn o
n P
ositiv
e C
alls (%
)
Avg. return on positive calls Avg. Strike Rate
Year
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 25
Appendix
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 26Source: ICICI Direct Research
Stock selection: Deciphering the bottom-up way…
Over the past few years, our emphasis on building a statistical model for stock selection, based on our in-house technical screeners, has provided rich dividends.
Year on year, we have strengthened our parameters to adapt to changing market dynamics. The virtues of such a statistical approach are:
(a) removing individual biases in stock picking; (b) efficient screening of market internals, which helps to build a holistic bottom-up approach;
(c) achieving more objectivity in market analysis to arrive at high probability investment ideas
Define Universe
845 NSE stocks
- Average daily volume >5k
- Market Capital > 100 Crores
- Minimum 1 year price history
Technical Screening
266 stocks
- Relative Strength, Momentum
- Trend and volume analysis
- Qualitative and compliance filters
Bucketing
266 stocks
- Outperformers: Robust price structure
- Structural Turnaround: from elongated period of
underperformance
- Bargain Buys: Price/Time correction done
Optimisation
62 stocks
- Insights on Sectoral views
- Risk/Rewards set up
- Volatility
- Peer comparison
Top Picks
CY20:
State Bank of India
SBI Life Insurance
Hindalco Industries
Godfrey Phillps India
RPG Life Sciences
PNC Infra
Persistent Systems
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 27Source: Bloomberg, ICICI Direct Research
…Stock selection: Bottom up way
NSE Symbol Company NameIdirect
Code
Market Capital
(| crore)
Returns
(6M) %
Returns
(12M) %
Outperformer
Structural
Turnaround /
Breakout
Bargain Buy
Auto and Auto ancilliary:
ASHOKLEY Ashok Leyland ASHLEY 22706 -14.72 -24.54 √
BAJAJ-AUTO Bajaj Auto BAAUTO 93337 7.89 18.30 √
EICHERMOT Eicher Motors EICMOT 57332 4.30 -9.48 √
MARUTI Maruti Suzuki MARUTI 211297 0.36 -6.45 √
TATAMOTORS Tata Motors TATMOT 49721 -3.43 -7.47 √
Banks
AXISBANK Axis Bank AXIBAN 206391 -10.09 16.69 √
BANKBARODA Bank of Baroda BANBAR 38480 -17.80 -21.37 √
HDFCBANK HDFC Bank HDFBAN 680588 1.87 15.73 √
KOTAKBANK Kotak Mah. Bank KOTMAH 316989 10.43 32.69 √
SBIN St Bk of India STABAN 282642 -8.02 5.71 √
Capital Goods:
HIRECT Hind Rectifiers HINREC 329 43.47 73.84 √
KEC K E C Intl. KECIN 6927 -15.23 -10.90 √
LT Larsen & Toubro LARTOU 179097 -16.72 -11.51 √
Chemical & Fertilizers
NAVINFLUOR Navin Fluo.Intl. NAVFLU 4467 25.80 31.19 √
* Stocks highlighted in Bold and Italics are our CY20 recommendations
Note: The list of stocks enlisted in the above report is selected on the basis of certain statistical and technical models. This
report recommends only 7 stocks and other stocks mentioned are only of analysis purpose
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 28Source: Bloomberg, ICICI Direct Research
…Stock selection: Bottom up way
NSE Symbol Company NameIdirect
Code
Market Capital
(| crore)
Returns
(6M) %
Returns
(12M) %
Outperformer
Structural
Turnaround /
Breakout
Bargain Buy
Consumer Discretionary
ASIANPAINT Asian Paints ASIPAI 165591 21.35 25.87 √
BERGEPAINT Berger Paints BERPAI 48309 51.71 49.61 √
RELAXO Relaxo Footwear RELFOO 15103 43.16 64.73 √
TITAN Titan Company TITIND 104586 -7.75 26.95 √
TRENT Trent TRENT 17781 24.52 38.20 √
Consumer Staples
DABUR Dabur India DABIND 82230 13.69 10.31 √
GODFRYPHLP Godfrey Phillips India GODPHI √
HINDUNILVR Hind. Unilever HINLEV 434727 8.40 11.50 √
ITC ITC ITC 296725 -13.58 -14.59 √
NESTLEIND Nestle India NESIND 137224 21.66 29.21 √
Hotels
INDHOTEL Indian Hotels INDHOT 17619 1.09 1.47 √
LEMONTREE Lemon Tree Hotel LEMTRE 4785 -12.53 -18.71 √
Insurance
BAJAJFINSV Bajaj Finserv BAFINS 142094 7.52 36.91 √
SBILIFE SBI Life Insurance SBILIF 94200 34.74 57.30 √
* Stocks highlighted in Bold and Italics are our CY20 recommendations
Note: The list of stocks enlisted in the above report is selected on the basis of certain statistical and technical models. This
report recommends only 7 stocks and other stocks mentioned are only of analysis purpose
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 29Source: Bloomberg, ICICI Direct Research
…Stock selection: Bottom up way
NSE Symbol Company NameIdirect
Code
Market Capital
(| crore)
Returns
(6M) %
Returns
(12M) %
Outperformer
Structural
Turnaround /
Breakout
Bargain Buy
Logistics & Transportation
CONCOR Container Corpn. CONCOR 34075 4.78 2.01 √
TCIEXP TCI Express TCIEXP 2999 17.10 23.53 √
Media & Entertainment
INOXLEISUR Inox Leisure INOX 3749 10.61 48.05 √
Metal & Mining
HINDALCO Hindalco Inds. HINDAL 44663 0.30 -10.73 √
JSWSTEEL JSW Steel JSWSTE 62570 -3.00 -14.84 √
TATASTEEL Tata Steel TATSTE 45820 -16.33 -21.14 √
NBFC
BAJFINANCE Bajaj Fin. BAJFI 237357 12.08 48.48 √
HDFC H D F C HDFC 399462 5.35 15.05 √
LICHSGFIN LIC Housing Fin. LICHF 21872 -21.31 -10.92 √
RNAM Reliance Nip.Lif RELNIP 20724 57.01 112.82 √
Oil & Gas
BPCL B P C L BHAPET 108387 28.23 36.07 √
HINDPETRO H P C L HINPET 40976 -12.01 4.75 √
MGL Mahanagar Gas MAHGAS 10263 17.16 13.88 √
* Stocks highlighted in Bold and Italics are our CY20 recommendations
Note: The list of stocks enlisted in the above report is selected on the basis of certain statistical and technical models. This
report recommends only 7 stocks and other stocks mentioned are only of analysis purpose
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 30Source: Bloomberg, ICICI Direct Research
…Stock selection: Bottom up way
NSE Symbol Company NameIdirect
Code
Market Capital
(| crore)
Returns
(6M) %
Returns
(12M) %
Outperformer
Structural
Turnaround /
Breakout
Bargain Buy
Pharmaceuticals and Healthcare:
BIOCON Biocon BIOCON 34704 9.06 -7.57 √
LALPATHLAB Dr Lal Pathlabs DRLAL 13531 52.92 75.55 √
GLAXO Glaxosmi. Pharma GLAPHA 27351 27.11 7.78 √
IPCALAB Ipca Labs. IPCLAB 13813 17.79 33.92 √
NH Narayana Hrudaya NARHRU 6139 32.77 57.15 √
RPGLIFE RPG Life Sciences RPGLIF √
SANOFI Sanofi India SANOFI 16162 29.37 10.69 √
Power
ADANIPOWER Adani Power ADAPOW √
TATAPOWER Tata Power Co. TATPOW 14187 -21.19 -31.62 √
Cement, Realty & Infra:
JKLAKSHMI JK Lakshmi Cem. JKLAKS 3277 -22.33 -10.57 √
OBEROIRLTY Oberoi Realty OBEREA 20045 1.40 21.24 √
PHOENIXLTD Phoenix Mills PHOMIL 11603 16.51 31.23 √
PNCINFRA PNC Infratech PNCINF 5141 0.05 34.59 √
ULTRACEMCO UltraTech Cem. ULTCEM 119818 -9.71 3.55 √
Sugar
BALRAMCHIN Balrampur Chini BALCHI 3621 6.19 59.19 √
DHAMPURSUG Dhampur Sugar DHASUG 1284 -10.11 21.17 √
* Stocks highlighted in Bold and Italics are our CY20 recommendations
Note: The list of stocks enlisted in the above report is selected on the basis of certain statistical and technical models. This
report recommends only 7 stocks and other stocks mentioned are only of analysis purpose
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 31Source: Bloomberg, ICICI Direct Research
…Stock selection: Bottom up way
NSE Symbol Company NameIdirect
Code
Market Capital
(| crore)
Returns
(6M) %
Returns
(12M) %
Outperformer
Structural
Turnaround /
Breakout
Bargain Buy
IT
NAUKRI Info Edg.(India) INFEDG 30403 9.09 72.73 √
LTI L & T Infotech LARINF 28630 -8.47 -3.99 √
PERSISTENT Persistent Sys PERSYS 5247 11.90 8.87 √
TCS TCS TCS 773160 -7.67 8.29 √
TECHM Tech Mahindra TECMAH 72420 -2.32 4.35 √
Telecommunications
BHARTIARTL Bharti Airtel BHAAIR 228809 22.67 51.98 √
* Stocks highlighted in Bold and Italics are our CY20 recommendations
Note: The list of stocks enlisted in the above report is selected on the basis of certain statistical and technical models. This
report recommends only 7 stocks and other stocks mentioned are only of analysis purpose
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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
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 32
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Pankaj Pandey Head – Research [email protected]
ICICI Direct Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 33
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We /I, Dharmesh Shah, Nitin Kunte, Ninad Tamhanekar, Pabitro Mukherjee, Vinayak Parmar Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the
subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Analysts are not registered as research analysts by FINRA and are not associated
persons of the ICICI Securities Inc. It is also confirmed that above mentioned Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee
of the companies mentioned in the report.
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December 19, 2019 ICICI Securities Ltd. | Retail Equity Research 34
Disclaimer