Technical Analysis of Indian Equities by Nooresh

Panic has No Logic — Wait,Watch, Research and Be Alert.

Before i start the post since many months the warnings have been very clear to readers to be very selective and look towards defensive stocks.


Also with the index we have kept it simple that in Panic there is no Logic so one may not try to brave and go buying falling stocks rather focus on quality. Some of the stocks i have kept mentioning are Aditya Birla Nuvo ( is now back to entry price of 820) , Godrej Inds, Smartlink, Nesco and Cements on large caps. Also SBI may be looked as a long term SIP candidate.


In simpler terms lets look at where could the index be on fibonacci retracements --

check detailed link here - 


On fibonacci an ideal retracement woul dbe 50 % or 61.8% in case of normal corrections which are not preceeded by mad bull runs ( 2007 was so we saw 73.6% retracement in 2008 )


For Sensex it comes to around 14500/13000.

( We saw a 61.8% retracement in 2004 election fiasco though it did not stay for a long time )

For Nifty

It comes to around 4300/3800 if we take Oct bottom or 4400/4000 if we take March 09 bottom.


Now other way to look at it is from a perspective of P-E for Nifty and Sensex.


Currently as per consolidated EPS -


Sensex ---- TTM EPS --- 1025

Nifty --- TTM EPS -------- 328


Forward fy 12 ( we just have 3-4 months left for it )


Sensex --- 1148

Nifty –---   361


Now fy13 eps estimates are at

Sensex --- 1296

Nifty ------ 410


This implies on trailing 12 months we trade at roughly ---- 15 times Sensex and 14 times Nifty

For FY 12 ----------               13.5 times Sensex and 12.9 times Nifty

For FY 13 ----------------- 12 times Sensex and 11.3 times


Suppose fy 13 does not see as expected growth and may be just 5% still then the eps would be closer to 12-13 times fy 13 earnings which by no chance is expensive or over valued.


The general band has been around 9-12 in worst case on trailing twelve months in panic times like 2008 or before. So we are in detoriating fundamental scenario in 2011-2012 rather then a panic of 2008 so we may consider that we are at the lower end of the P-E band and any further drop makes it a good risk-reward buy area for long term investors.



Technically we would still wait for a turnaround to buy high risk stocks till then will continue the strategy to buy quality stocks and finish buying by 14000-14500 and 4300-4500  range for investment. Also should be ready to see a notional drop of 10-15% on the portfolio. We are on high alert to look for any panic or turnaround signals !! as nobody can spot a bottom but one can spot a turnaround little higher then the bottoms

Till we are in quality stocks and defensive ones the current drop is interesting but we would look into high-beta stocks only at the lower end as mentioned above.

Fortunately few of our quality stocks have not been hit badly and if they are in further cracks will be more then happy to add them with a longer term view.


Also of late i have got a few questions from people like shall i sell at 4600-4700 and cover at 4200-4300 the stocks which i have bought. Should i get into high cash.???

My answer is such a thought process is clear indications of panics and generally this leads to sharp cracks in midcap/smallcap stocks. For now the time to shift to cash is gone. Only thing that can be done is shift to quality stocks :).


Disclosure: The above view is purely with a long term perspective and please do your own research. Its easier for us to say long term as we have been of the view to be on high cash since 19000/19900 and been very selective so current downfall has hit the investment portfolio but very marginally and notionally



This is the best time to learn,research and strategize to benefit the max out of the next cycle. For that you can always join our technical training programs. For more details call Kazim 09821237002 for the training schedule.




Nooresh Merani ( If you would like to talk to me please drop in a mail with your contact details)


( Any body who would want more personal guidance may drop in a mail to us also on )

Article by Nooresh Merani

Nooresh has written 2799 articles.

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{ 23 comments… add one }
  • Sanjay December 19, 2011, 14:08

    Hi Nooresh,

    I completely agree with your view and want to add some more points. In this bearish scenario one should also look at dividend yielding stocks apart from your defensive picks that give atleast 5 % tax free return (e.g. Cosmo, Samkrg Piston, IFCI, DAI-ICHI, Dynemic products etc.). Apart from tax free return, they will be first to bounce in next 8-9 months when the market improves and they go ex-dividend. So we see an effective return of 30 % atleast from the lows.

    Also can we watched out are highly suppressed stocks like FSL, Alok, sterlite ?

    Can you suggest me
    1. what to do with Shipping Corp (Its been a consistent and excellent dividend paying PSU but recent results suggest that dividend might not be paid and it has come to 50 levels). What do we do with this?
    2. Coal India has 60K Cr of cash and is in monopoly. Is it a SIP candidate for long term ?
    3. GTL infra ?

    Kindly respond.


    • nooresh December 19, 2011, 21:12

      The dividend yield is a very difficult way to go.

      Do you think Dynemic and Cosmo will be able to stick to their dividends ?

      So i would not just go ahead and buy because of div yields. HCL Info is at 18% yield

      I would look into sterlite but fsl and alok will wait.

      SCI again is a case of div yield trap.

      Coal India 250-280 in any panic.

      GTL infra would avoid in current situation.

      • sanjay December 19, 2011, 22:56

        Thanks for your response. Always value your feedback.

        I have been tracking this market since 2005 so have benefited and gained handsomely with this approach in some stocks. Cosmo films was ur pick and it has been a consistent performer. Dynemic has given out consistently in the downturn of 2008-09. So it depends..


        • nooresh December 20, 2011, 11:22

          Hi Sanjay,

          Yes cosmo has been on the radar but now the sector is a bit oddly placed. I like jindal poly in it.

  • ANJALI December 19, 2011, 19:07

    Aditya Birla Nuvo HAS BROKEN IT’S SUPPORT LINE What u think about it now?
    where can we expect next support ?

    • nooresh December 19, 2011, 21:09

      Hi Anjali,

      Its more of a fundamental call on the stock.

      Next support comes to around 740-760 in any panic.



  • Hemanta Gogoi December 19, 2011, 22:32

    Dear Nooresh,

    It seems from your writing that you are a sincere man. I just want to know why do you run advisory service, because one can make much much more money by trading. Are you not confident that you can trade yourself, rather than running a advisory service. As far as I know not of the greatest traders like George Soros, Stanley Druckenmiller, Michael Marcus etc. a long list, says anything about movement of stocks, as mathematically it has been/can be (emphasise mine) proved that it is random. Why why… on this earth people give/sell advise
    about stock market movement.
    If one can double money once every month, it just needs 15 months, next is …… Heaven

    • nooresh December 20, 2011, 11:26

      Hi Hemant,

      I dont really participate in the markets in a very huge manner so that we can give unbiased advice. So as a coach one can play a bit and learn from it and guide properly.

      With technicals all we try to do is increase the proabability of making money with a lesser risk. Also for a trader the scale is as important as percentage returns.

  • Pranav December 19, 2011, 23:04

    Hello Nooresh,

    What do you think we should do with the following stocks ? Avoid right now or SIP? Any targets / suggestions would help. I am a long term investor, not a trader.

    1. SBI – i bought some at 1620 levels yesterday. Should i keep SIPing as it falls or do you see a major issue with SBI?
    2. Godrej Industries – I know you’re very positive about this, however it has fallen with the overall market. Is it time to buy or can wait a little for more downfall?
    3. JP Associates – worth at 58 levels?
    4. HCL Tech – I’m seeing it in a range of 380 to 420 since some months now. Its a strong company. Do you have any opinion on it?
    5. Dabur – very slow momentum but downfall is limited even when the market cracks. Any targets on the downside & upside there?
    6. Aban Offshore – It has taken severe beating in the last 1 year. Worth a buy now?

    Thanks. Your insights are always very helpful. Keep up the good work.


    • nooresh December 20, 2011, 11:22


      SBI — Its a long term and you may take a Pyramid where you buy on falls on every 50-100 points and not a fixed SIP as pain can last for a long time.

      Godrej Inds — Maintain a view of 180 or lower being a good level for a 1-2 yr view.

      JP associates is a contra play.

      HCL Tech — No view.

      Dabur —- 90-85 a strong support.

      Aban — technically not stoopping at all.

  • Ravi December 19, 2011, 23:26

    I have 1250 ASHOK LEYLAND LTD @27.50. Keeping 23 as stoploss.Can you give some quick view on these.(Exit or hold).Thx

    • nooresh December 20, 2011, 11:19

      Hi Ravi, Stopped on the stock else you can look to average at 18-20 and exit on rise.

  • Ravi December 19, 2011, 23:31

    Also your view on
    BERGER PAINTS INDIA LTD (Have 200 @102 rs) CMP – 82
    NAVNEET PUBLICATIONS (Have 500 @60rs) CMP – 51

    Thanks for your help

    • nooresh December 20, 2011, 11:19

      Hi Ravi,

      Berger Paints and Navneet have been our investment picks too have taken a bad hit. Nothing wrong fundamentally we may now look to buy more on panics.

  • Naheem Pasha December 20, 2011, 11:05


    I have got an exposure to Jain irrigation DVR at 45 rupees around 1250 shares, but it is continuously hitting bottom circuit, shall i buy more ?? is it anything fundamentally wrong with Jain irrigation, Please clarify.

    • nooresh December 20, 2011, 11:12

      Hi Naheem,

      The view was to buy Jain Irrigation DVR provided jain irrigation remains the same. So it was more an arbitrage trade. As such the stock has seen a bad hit and dont really know on fundamentals but technical its breaking every level.

  • Rahul December 20, 2011, 11:11

    Dear Mr. Nooresh,

    Need your views on all of my below holdings.

    Greaves Cotton Ltd

    Gujarat NRE Coke Ltd

    L&T Finance Holdings Ltd

    Lanco Infratech Ltd

    LIC Housing Finance Ltd

    Reliance Power Ltd

    Yes Bank Ltd

    It will be highly appreciated.Thanks

  • Naheem Pasha December 20, 2011, 11:19


    Thanks for the reply, shall i average it more ?? as budget is nearing and we can expect something good for irrigation sector ??

  • Hari December 20, 2011, 11:45

    Whats ur chart sense on Financial Technologies ? Looks strong to me.

  • meetesh December 21, 2011, 15:42

    Dear Nooresh,

    Whats your view on Rohit ferro. The promoters have not only taken the entire rights issue at rs 60, they have now taken 2.5 crore shares at Rs 60 in a pref allotment. Current price is Rs 25 and promoter holding post pref issue will go up to around 75%

    • nooresh December 21, 2011, 21:02

      Hi Meetesh,

      Will look into the stock.

      The management has been a bit awkward in their actions till now.

  • meetesh December 26, 2011, 15:24

    Dear Nooresh,

    I know the management has been awkward. I mean who would take shares at Rs 60 when the current market price is just 24 and the average for the last six months would have been rs 30.
    But the best part is now they will hold close to 75%.

    Maybe it is the operators who are trying to keep the stock price subdued so that retail is forced to exit and in the next bull run once they have full control they can take the price skywards. This is based on my uderstanding that when positive news does not move a stock price up either the news is false or a strong operator is yet to complete his job.

    Would like to have your views on the same as you would have more info and knowledge.

    • nooresh December 28, 2011, 09:40

      Hi meetesh,

      Well i cannot more about the management on a public forum but i would prefer to look into the stock in better market conditions as stock has been a performer in good times.
      Whether they will subscribe the preferential issue?


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