JSPL– Jindal steels & Power Ltd
The time taken to actually form the bottom
or reach the bottom from the top of INR796 was 35 months which on time cycle parameters is almost correct with minor deviation of just one month.
And in percentage retracement terms the rates retraced by massive 77% from top. This is also as per our analysis is very much near to retracement percentage levels of 76. Bottom formed in August 2013 was also up by more than 100% from the one that was formed in September 2008.
And the bottom so formed in August 2013 was formed with very heavy volumes indicating final panic by one and all. So taking in to consideration the time cycle theorem and percentage retracement theorem and higher bottom theorem, we hereby firmly conclude that, the bottom formed at INR 181, in August 2013, is the final bottom which is not going to be breached henceforth negatively, unless some extraordinary event takes shape.
After discussing about the justification of bottom or base case scenario let us now focus on next step. On very closely analyzing the Daily, Weekly & Monthly Charts, we found that the stock of JSPL has multiple resistances at INR 285, at INR 331 and at INR 366 on the daily charts.
Heavy resistance is clearly visible at INR 285 on Monthly Charts. And resistance is also visible at INR 285, INR 331 and INR 366 on weekly charts as well. So the first thing that strikes the attention here is, the Resistance at INR 285, common on all three charts, making it the very tough and strong resistance to cross decisively, for any kind of next up move.
Now if we look at the 48 WEMA it is @ INR 273 & 13 MEMA is @ INR 278. So it makes first clear range of INR 270 to INR 290 on the higher side which needs to be broken decisively with very good set of volumes for next step eligibility.
And what we witnessed in last few fortnight that the stock of JSPL do reached the range but failed to cross the same and volumes were also not so good to support the penetration. But it can be taken as first attempt to break through the first level of resistance. As it was first attempt we saw a good retracement immediately from the INR 290 and a low of INR 231 was made swiftly without giving any chance to anyone to think and act.
And that was expected as it generally happens in almost all technical corrections. It was a 20% retracement from INR 290 levels making it very important level of support.
Let’s now discuss the other parameters as well. 13 DEMA is @ INR 242.60, 48 DEMA is @ INR 248.75, 200 DSMA is @INR 245 and 13 WEMA is @ INR 248.85. Almost 78-79% retracement of the up move from INR85 to INR 796 also comes at INR 239. So here we get a very good range from INR 231 to INR 249 that can serve as a very good support as well as a very good resistance.
If we call it support you might immediately agree but if we call it resistance you might dis- agree. But we call it resistance as well, because here we have to take in to consideration other parameters as well.
RSI on Daily charts is at 42.38, on Weekly charts is at 44.55 and on Monthly charts is at 35.36. It indicates that RSI on all three time zone charts is in clear negative territory. RSI, In order to turn positive on short and long term charts, it will take at least seven to maximum seventy days.
Near term moving averages are below long term moving averages on daily as well as on weekly charts. And they are still not showing signs of turnaround. But on Japanese candlestick pattern we are getting signals of bottom formation process.
So taking in to consideration we can conclude that in short term there could be attempts to break out from immediate range of INR 231 to INR 249 but similarly there will threat of penetration of lower end of the above discussed range. We advise not to panic if medium and long term investors are holding the position as even if bottom of INR 231 breaches, it will bounce back again in short time.
But for short term traders it may cause some panic as if INR 231 is broken decisively on closing basis than it can go down to as low as INR 200. Stock is very good for accumulation from a medium to long term prospective time frame of minimum twelve (12) to eighteen (18) months. We can look for a very decent appreciation of minimum 50% to maximum 75% from the current market rate of INR 239.
- Rajkishore BangAstro-Tech Analyst