Saturday, June 5, 2010

Nifty Heavies Revisited .. !

   Which Nifty Heavy Weight Stocks to Buy .. ?

Even though  the Indian markets were on an uptrend on Friday when the trading ended, the western markets has fallen since then. The US markets lead the Friday's sell off. The US markets have closed at a four month low for the week. This sell off was the result of  a lower than expected job creation by the private sector in the month of May. Analysts are even questioning the sustainability of the present economic recovery without  the job growth. The Euro currency too hit a new four year low on last Friday. Hungary, a non- Euro country from Europe, too disclosed that it's financial situation is worse than what is published as has happened in the case of Greece earlier. In the light of the international turbulence, this edition of Nifty Heavies takes  a look at which stocks are  buys on the basis of recent strength, in case the Indian markets too joins the sell off.

Nifty Heavy Weights

The top ten members of the S&P Nifty index and their prices and various daily moving averages are given in the table below.    

ITC, INFOSYS, SBI, TCS and HDFCBANK seems to be the leaders of the pack on the basis of last traded prices in comparison with their 200 day moving average. The market leader RELIANCE continues to be a laggard. Recent performers like ICICIBANK and HDFCBANK as well as the IT heavies  INFOSYS and TCS seem to be loosing momentum or pausing. Therefore, a study of the individual charts of the heavies is required before coming to any conclusion.
The Nifty Index attained it's recent high in the month of April.  For an easy comparison of how  these  big Nifty stocks held up in the correction, regression channels have been drawn in all the individual stock charts starting from the previous high. The lower panel of charts also shows the various moving averages.       


Reliance is trading below it's major averages and the stock is still trading in the falling regression channel. Even though this stock is weak, it may be noted that the stock has been trading in a range for almost an year. The stock's recent range is between 975 to 1050.


The Infosys reached the high in March and is correcting from thereon. However, the correction has not been very steep and the stock has been able to reach the top falling trend line of the regression channel easily. Besides, it has traded above all it's major daily averages making it one of the perennial favorites.

ICICI Bank   

ICICIBANK has certainly lost it's momentum in the recent correction, even though this stock was one of the earlier leaders. The stock is trading below it's major averages and has just reached it's 200 DMA in the current recovery. It has not been able to test the falling trend line of the rather steep regression channel indicating weakness.

Larsen & Tubro

One of the earlier laggards, LT is one of the stocks which has reached a new high recently. Even though the LT stock is quoting at just 5 % above it's 200 DMA, this is one of the strongest stocks on the basis of recent performance. 

ITC is the best performing Nifty Heavy weight stock at present. It has declared very good results for the last financial year and is quoting cum dividend ( Rs.10 ) at present. On the basis of the recent performance, ITC is the best Nifty heavy weight stock compelling investment on a correction. This stock may be bought at around the 270 levels for investment.

HDFC is one of the perennial favorite stocks of the Indian market and it has stood up reasonably well in the correction. It took support on it's 100 and 200 DMAs at 2630 in the correction.  Even though, the stock is still trading in the falling regression channel, it is mostly trading sideways.


Even though the private sector peer ICICIBANK corrected more, HDFCBANK has stood up reasonably well in the correction.   The stock took it's support on the 100 DMA at 1810 and has  traded above the falling trend line of the regression channel. The HDFCBANK stock has reasonable strength even though it has not retained it's high momentum.


The SBI stock has been one of the surprising performers of the recent recovery. This is the only stock with an upward sloping regression channel in the sample. The stock has outperformed even in the face of a below average result and an impending hike in interest rates. The sovereign backing seems to the trump card here. Whatever the reason, SBI is one of the recent best performers. 


ONGC entered the top ten list only in the last wee's edition. The stock has regained it's momentum after the government's decision to raise the administered prices of natural gas and further liberalisation of market linked prices. The stock is trading with good momentum and is candidate to the buy list. 


Like it's IT peer INFOSYS, TCS stock too hit it's high in March and is correcting now. The stock took it's support at the 200 DMA at 695 and has recovered to the falling trend line of the regression channel. However, the stock has not been able to trade above it's 50 and 100 DMAs placed at the 770 levels.   

ITC is selected as the best stock for investment. SBI and LT too joins the list on the basis of the recent performance. Other stocks which may be considered for investment are HDFCBANK. INFOSYS, HDFC and ONGC.
The above conclusion and the recommendation are on the basis of recent momentum and are subject to changes from time to time. All usual disclaimers like 'past performance may not be sustainable in the future' etc are applicable too.
Cheers and Prosperous Investing !!!
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