Technical Analysis of Indian Equities by Nooresh

Fallen Angels – Suzlon, GMR Infra, GVK Power, DLF, Jaiprakas Associates, Ballarpur Inds & Unitech

I am personally a bit sick of all those messages as to how if one would have invested 10000 rs in Infosys Wipro and it would be worth 100s of crores. It just makes it sound easy and makes people live in the hope with bad stocks. Or comparison how you should have bought a share of Maruti instead of buying a Maruti and you would own a Mercedes now.

The harsh fact is for every big wealth creator in India we have 3 others which have destroyed wealth !! So its not as easy as it seems.

For example this tweet by my team mate - Ankit Chaudhary

So before I write this post on how some of these wealth destroyers seem to be showing signs of bottoming out let me warn you these are the worst set of names to trade in given the volatility as well as the risk. Lot of these stocks have fallen 90-99% from peak !!

I have been avoiding these names for a decade as technically I believe the Heroes of a Bull Market do not come back for a decade or more. ( Example Cements of 1992 started rallying back in 2003 , IT of 2000 in 2010, Real Estate and Infra of 2007 in 2017-2020 ? selectively ? ) .

The difficult part is selection in such names as some of them would end up being junk.

A quick definition of Fallen Angels from Investopedia

"Fallen angel securities are often attractive to contrarian investors seeking to capitalize on the potential for a recovery by the issuer from a temporary setback. Under these circumstances, the downgrade process usually starts with debt being placed on negative credit watch, which may require portfolio managers to sell positions, depending on fund-specific covenants."

Technical Charts of some of the names which seem to be making basing out patterns.

Disclosure - I do not have holdings in any of the stocks below but may try to build courage to jump into a trade when the trend changes. Personally I prefer buying stocks at All Time Highs rather than Fallen Angels.

Would like readers to point out any other such fallen angels which have a chance of turning around.

Ballarpur Inds

This one seems a classical Fallen Angel with Plant being shut and Debt being downgraded.

Technically a closing above 22 will confirm a trend change.

ballarpur inds

DLF Limited-

The darling of 2007 and Mr K P Singh was the in the top 5 richest in India after Ambani. This link should be bookmarked - K P Singh pips Anil Ambani as 2nd richest Indian

Good base built at 80-100. Major resistance at 160-170. Can there be some triggers in next couple of years ?

DLF

Jaiprakash Associates

One of the big multibaggers of 2003-2007 and vice versa in 2008. A recent QIP at 100 + and stock down to 12.

Good base built at 12 and a strong set of volumes in lats few months. Last bottom at 12 will be a support.

Jaiprakash Associates

Unitech

I remember this stock on circuits for months in 2006 and now is down 95-99 % from the peak of 2007.

Lot of bottoms around the 4 rs mark and tops at 8. A sustained closing above 8 will confirm a trend change. If somebody wants to write off the full investment to zero this seems a nice punt. Disclosure - I don't own any Smileso no bias. 

Unitech

GVK Power

Still away from a trend change but a lot of tops around that 8 rs mark. A sustained close above that will confirm a trend change.

GVK Power

GMR INFRA

This looks another classic case of bottoming with same bottoms at 10 and now a nice little breakout above 16. Has the trend change ?

GMR Infra

Suzlon

Another company which ended up being part of Nifty and then collapsed 95% or more. Good base built at 12-13 rs recently and quite a few tops at 19-20.

Has the direction of Wind finally started changing. It gave such a false indication last time it went to 40 in 2014. But this seems interesting and everyone under the sun who trades market has the buzz that the numbers are going to improve and orders will flow Smile A sustaining move above 20 would convince a technical view.

Suzlon

 

Nooresh Merani

Securities covered above:: Suzlon, GMR Infra, GVK Power, DLF, Jaiprakas Associates, Ballarpur Inds & Unitech

SEBI Registration disclosure – Investment Adviser ( INA000002991)

Financial Interest:

Nooresh Merani and his family/associates/ analysts do not have exposure in the securities mentioned in the above report/article.

Nooresh Merani and his family/associates/ analysts do not have any financial interest/beneficial ownership of more than 1% in the company covered by Analyst.

Nooresh Merani and his family/associates/ analysts have not received any compensation from the company/third party covered in the above report/article ever.

Nooresh Merani and his family/associates/ analysts has not served as an officer, director or employee of company covered in the report/article and has not been engaged in market-making activity of the company covered in the report/article.

The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision

Article by Nooresh Merani

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{ 1 comment… add one }
  • JIGS March 18, 2017, 13:48

    Apart from Technicals which is primary consideration We should also think if business of these companies have favourable macro environment to bring back kind of growth they had in 2004-2008.
    DLF has assets which can pay off debt and Suzlon has sunrise theme to get back to old growth. Don’t know what will bring back growth in rest.

    Reply

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