Saturday, June 26, 2010

Nifty Heavies Revisited .. !

  A Followup on Nifty Heavy Weight Stocks ... !

In the last edition of the Nifty Heavy Weights - "Which Nifty Heavy Weight Stocks to Buy .. ?", it was recommended that  ITC is the best buy among the top ten Nifty constituents.  It was also recommended that the stocks of  SBI, LT, HDFCBANK, INFOSYS, HDFC and ONGC are also having good positive momentum warranting long positions. As expected these stocks have out performed.   Now let's have a follow up of the Nifty and it's heavy weights.

Nifty and It's Heavy Weights

The top ten members of the S&P Nifty index, their weights, rank, closing prices and various daily moving averages are given in the table below. The corresponding close and the moving averages of the S&P Nifty index is also given in the table.

ITC remains the best performer in the pack and is quoting 17 % above it's 200 day moving average (  DMA ). Infosys, HDFC, HDFC Bank and ONGC too are quoting above their respective 200 DMAs by about 10 %. ICICI Bank is the worst performer and is quoting below it's DMAs. The Nifty index is quoting above it's 200 DMA by 4.17 %. Reliance continues to trade in the trading  range between 1000 and 1100 and is quoting very near to all it's DMAs.

S&P Nifty Index - Daily Chart

The Nifty index reached it's post bear market high in the first week of April, 2010. To make the visual analysis of the charts, regression channels are drawn in the above and all the following charts to show the general direction of trade since April high. As you can see from the chart above, the regression channel of the Nifty index is still moving slightly downward.


Even after the favourable settlement of the gas dispute with the ADAG group and the freeing of petrol prices and a promise to free diesel prices, the Reliance stock is still trading sideways. The present trading range seems to be 1000 to 1100. The stock has been trading in a slightly wider range for almost an year. 


Even though the stock has not reached a new post April high, it remains as one of the out-performers. Also it remains as one of the least interest sensitive stocks along with ITC in the top ten Nifty Heavy weights.

ICICI Bank    

ICICI Bank is worst performer in the top ten list. It is trading in a downward slanting regression channel. This stock is showing more weakness in comparison to the other three interest sensitive financials in the top ten list viz. HDFC, HDFC Bank and SBI. Any further weakness in the general market may see the stock revisiting the 800 - 820 range.


LT joined the performers since the last quarter's results but may be affected in a rising interest rate regime. However, as of now, this stock has good momentum and may get support at 1680 to 1700 levels.


ITC still remains the best performer and it may be accumulated on any weakness at the 275 - 285 range. This is also the least interest rate sensitive stock of the top ten list. A normal monsoon as per the latest prediction of the IMD, will add further growth impetus to the stock.


Even thorough HDFC stock may be interest sensitive, this is one of the rarest of blue chips which performs steadily  in all kinds of interest rate regimes. This stock also remains a favourite  of the  institutional investors and may be accumulated. This stock remains a buy around the 2700 levels.


Even though HDFC Bank is trading in a flat trajectory according to the regression channel study, it remains the best bank among the top ten list. This stock can also be accumulated at lower ranges of the regression channel if available.


Even though SBI has recently been an out performer with an upward slanting regression channel, the fact remains that it is an interest sensitive stock. The stock has been performing well recently, may be, because of it's sovereign backing and the receding fears of another dip in the economic cycle. 


Liberalisation in the pricing of petroleum prices and consequent reduction in the subsidy burden has made this stock an out performer. This stock may accumulated at around the 1200 levels.


BHEL has re-entered the top ten heavy weights list and TCS has gone out. This blue chip is an interest sensitive to some extent and is still trading in the downward slanting regression channel.


As in the previous edition, ITC remains the numero uno stock of the top ten Nifty heavy weights for investment. ONGC, Infosys, HDFC and HDFC Bank too joins the list of best stocks for investment. LT may also be counted for investment at lower levels. Therefore the best performers list remains the more or less the same with the exclusion SBI. This recommendation is issued on the back of expecting interest rate tightening by the RBI in the ensuing months. 

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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