The current year has been remarkably favorable for domestic markets, with major indices reaching record highs. This strong performance highlights the underlying strength of the equity market, as evidenced by an  lifetime high closing of the benchmark index Nifty 50  that confirms the ongoing bullish sentiment in equities. Amidst this market backdrop, this mid-cap ceramic tile manufacturer has emerged as a compelling investment opportunity, showing significant signs of a trend reversal getting confirmed.

Asian Granito Ltd. (ASIANTILES) has notably outperformed its peers in the ceramic and sanitaryware sector. Year-to-date, the stock has surged by 38.27% while competitors like Kajaria Ceramics and Cera Sanitaryware have faced declines of 7.47% and 3.45%, respectively. This relative strength underscores the company’s resilience and potential for continued growth.

From a technical analysis perspective, the stock has been exhibiting strong bullish signals. Last week, ASIANTILES  closed at a 52-week high, marking a significant milestone in its price action. In May 2022, the stock had peaked at Rs. 86.45 , followed by a corrective decline that saw the price drop nearly 60% to stabilize around Rs. 34 in March last year. However, the stock has since rebounded and moved higher, crossing above key moving averages, including the 50-week and 100-week moving averages. This movement suggests a bullish turn in the near-term trend.

The uptrend faced resistance near its previous high in formed in November last year, leading to a retracement towards the 100-week moving average. The stock then formed a base around Rs. 51.50, signaling the resumption of an upward movement. Last week’s breakout above this resistance level has attracted significant buying interest, further supported by the stock’s move above the 200-week moving average. This price crossover is a strong indicator of a bullish trend in the underlying stock.

Additionally, the On-Balance Volume (OBV) indicator had already signaled this bullish breakout in advance. The OBV has continued to mark a 52-week high, reinforcing the bullish sentiment around the stock. The bullish divergence of the OBV and the accumulation observed over the past few weeks aligns with the positive price action, further supporting the potential for continued gains.

Given these factors, Asian Granito Ltd. presents a promising investment opportunity. Investors may consider entering near the Rs. 84-85 levels, with a potential target of Rs. 115, reflecting the stock’s strong technical setup and bullish outlook. Any price move below Rs. 78 can be considered to move out of the stock.

-Foram Chheda, CMT

This year has been a very trending one for the equities. Global equity indices have been trending higher and India is no exception. In fact, the Indian equities have performed in line with the US Equities. While the S&P500 Index has gained 15.20% on a YTD basis, the Nifty 50 has staged an equally impressive show by gaining 14.63% over the same time.

However, the equities look a bit overstretched on the charts. They also remain significantly deviated from the mean and may now consolidate in a broad but defined range. Having said this, there are two things that portfolio investors would need to do; first, guard profits vigilantly at higher levels; and second, switch and rotate their investments into stocks that are showing impressive technical setup and improving relative strength.

This large-cap engineering conglomerate falls in this definition. For the majority of 2024. this stock has stayed in a sideways trajectory and has traded in a defined range oscillating back and forth and staying devoid of any directional bias.

Besides being an important constituent of other sector indices, LT is one of the major constituents of the NIFTY 50 Index. After HDFC Bank, Reliance, ICICI Bank, and Infosys, LT enjoys the fifth largest weight in the index. While the benchmark Nifty 50 gained 14.63% on a YTD basis, LT has returned 9.80%, and that too the bulk of the gains coming just in the last couple of days. If we discount that, the stock would have been flat for the whole of 2024.

From a technical standpoint, the stock looks set to resume its upmove and rise meaningfully from its current levels. A close on 29th July has seen LT closing above the upper Bollinger Band. While a temporary pullback inside the band cannot be ruled out, this has certainly set the stage for a possible trending move on the upside.

The RSI has marked a new 14-period high; it is neutral and does not show any divergence against the price. The stock has also shown evidence of strong accumulation while it was trading in a range and also it has shown proof of participation of volumes in the current upmove that was seen over the past few days. This has come in the form of On-Balance Volume (OBV) inching higher and hovering around its highs.

The stock is inside the improving quadrant of the RRG when benchmarked against the broader NIFTY 500 index; on the weekly timescale, it is on the verge of entering into the improving quadrant.

A strong improvement of relative momentum is seen in the stock; Relative Strength is also seen changing its trajectory for the upside.

LT qualifies and makes a strong case for a favorable sector/stock rotation and inclusion in the portfolio. With earnings already out of the way, all declines would qualify for a entry in the stock so long as it keeps its head above 3580 level which is a confluence of two major pattern supports.

Going by the classical price measurement implications, an upside target of 4100 can be expected; it should also be noted that a close below 3580 would negate this technical setup.

Foram Chheda, CMT,
Technical Research Analyst

In the realm of investments, identifying opportunities that align with both technical indicators and fundamental analysis can pave the way for lucrative outcomes. One such prospect emerges within the domain of large-cap metal stocks, presenting an enticing avenue for investors seeking robust returns.

A look at the daily chart shows that an uptrend started with TATASTEEL crossing above Rs. 110 levels in June 2023; this also marked the stock crossing above all three key moving averages. Since then, by and large, the stock has remained on a rising trajectory; the corrective phase that was seen between September and November last year found support at the 200DMA which subsequently led to the resumption of the uptrend.

Zooming out to see a bigger picture on the higher timeframe weekly charts, technically speaking,  it reveals compelling insights into the trajectory of this stock. Following a peak near Rs. 153 in July 2021, a corrective decline ensued, persisting for the subsequent year. However, the tide gradually turned as the stock began to form higher tops and higher bottoms, indicative of a shifting  underlying trend. Crucially, this move facilitated a notable ascent for the stock as it took it above both the 50-week and 100-week moving averages, underscoring a bullish undertone in the long-term trend. 

Recent developments have further bolstered confidence in the stock’s trajectory.  The stock recently tested the previous resistance near Rs. 150 levels  leading to the formation of a classical double-top on the weekly chart. Subsequently, a breakout from this established resistance ensued, accompanied by a surge in upside momentum. Despite a brief stint of selling pressure witnessed in the benchmark index, the stock remained resilient, retracing back to its breakout level before showcasing signs of resumption.

This resurgence has been underpinned by a uptick in trading volume, corroborating the prevailing bullish sentiment. Furthermore, indicators such as the On-Balance Volume and Relative Strength (RS) have lent credence to the optimistic outlook. Both indicators have experienced breakout moments from downward-sloping trendlines, signaling a favorable shift in momentum. Notably, the RS indicator showcases that the stock is outperforming the benchmark Nifty 500 index, further accentuating its appeal. 

Intriguingly, the RRG JDK RS Momentum indicator has crossed the 100 mark, indicating a notable uptick in momentum. This development augments the investment case, offering a compelling  opportunities for investors. 

Importantly, the Fed has hinted at three rate cuts this year. Even if one of two such rate cuts happens, it will keep the Dollar Index under check which is likely to aid the metal and commodities stocks. From an investment perspective, the breakout from a longstanding resistance after nearly two and a half years underscores the bullish momentum underlying this stock. Consequently, it presents an attractive proposition for investors, with the potential for an upside of approximately 10%. As a precautionary measure, any price movement below Rs. 140 may warrant reconsideration.

In summation, the confluence of technical indicators, coupled with favorable market dynamics, positions this large-cap metal stock as a promising investment opportunity.

– Foram Chheda, CMT