Blog posts of '2024' 'September'

Stock name: Bayer Cropscience Ltd.

Pattern: Resistance breakout

Time frame: Weekly

Observation:

The stock reached a previous high in September 2020 and later consolidated, facing strong resistance around the 6200 level. In June 2024, it broke through this resistance with strong volume, moving upward before retesting in August. The stock rebounded from the retest with good volume, and based on technical analysis, if it maintains its current momentum, it may continue moving higher. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Laxmi Organic Industries Ltd.

Pattern: Falling wedge pattern

Time frame: Weekly

Observation:

The stock had been trending downward since September 2021 and eventually formed a falling wedge pattern on its weekly chart. In August 2024, it broke out of this pattern with strong volume and an upward movement. According to technical analysis, if the stock can maintain its current momentum, it may continue to rise further. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Many companies are now announcing share buybacks, and to understand this trend, we first need to know what a buyback is. A buyback refers to a company purchasing its own shares from shareholders. These companies, listed on the stock market, offer to buy back shares from investors, often at a price higher than the market rate. In return, shareholders receive cash for the shares they sell.

Now a question may flock into your mind that why does a company come up with buyback?

Companies resort for a buyback for many reasons. However, there are two big reasons in most cases

1. Companies with excess cash can spend it to buy their shares back which improves the investor confidence in the company
2. They want to reward existing shareholders for their trust in the company When the company feels that that their shares are undervalued, a buyback can boost their value.
3. When the company feels that that their shares are undervalued, a buyback can boost their value.

The question still remains unanswered that why is that now so many companies are coming up with buybacks?The reason is Budget 2024 presented in Jul’24 which changed the way buybacks are taxed, before the budget, companies used to pay a 20% tax when they buy back their shares. But from October 1st, this tax has to be borne by shareholders and not the company. In fact, the entire proceeds received from buyback will be treated as a dividend income.Let us understand this by way of an example, let us assume that Mr. Chandu is a wealthy person and falls in the highest tax bracket and Mr. Bandhu is a middle-class person and falls in 10% tax bracket, now let us understand the impact of this change on both of them.
In case of Mr. Chandu, the tax is more as compared to the tax applicable to the company, however the tax is lesser in case of Mr. Bandhu.

As you can see how the new buyback tax rules are unfavourable for high-income investors, increasing their tax burden by about. On the flip side, low-tax bracket investors benefit making buybacks more attractive for them.

And this effectively means that the new tax rule will be hurting the higher-income shareholders the most, with the top shareholders like promoters and big investors of companies getting taxed at a higher rate. And that would also make companies prepone their buy back plans, if any, before October.

In order to avoid higher taxes for their most valued shareholders, and bring in more shareholder value when they can, companies are trying all they can to complete their buybacks before October.

Now, if you have carefully read till now, you would have noticed that the buyback receipt will be taxed as dividend, now a natural question arises is what will happen to the purchase price of these shares, this cost would be considered a loss. You can adjust it against your other capital gains to lower your taxable income.

For example, if you have a capital gain of ₹60,000 in the same year, you won’t pay any tax on that gain since it’s offset by the ₹1,00,000 capital loss from the buyback and the remaining ₹40,000 loss can be carried forward and used to offset future gains for up to eight years until it’s fully utilised.

This new rule would may also encourage companies to pursue buybacks only when they feel that their shares are genuinely undervalued.

Stock name: Prism Johnson Ltd.

Pattern: Cup and handle pattern

Time frame: Daily

Observation:

According to the TA blog from September 5, 2024 (link for reference), the stock formed a cup and handle pattern on its daily chart and registered a breakout on September 3, supported by strong trading volume. After the breakout, the stock briefly retested the breakout level but rebounded sharply on September 10 and 11. Between September 5 and 11, 2024, the stock surged over 25%.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Cyient Ltd.

Pattern: Flag and pole pattern

Time frame: Daily

Observation:

The stock experienced a strong rise in August 2024, stabilizing from August 21. This created a flag and pole pattern on its daily chart, followed by a breakout on September 11, 2024, backed by high trading volume. The next candle confirmed the breakout, and if the stock sustains this momentum, it may see further upward movement according to technical analysis. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: AU Small Finance Bank Ltd.

Pattern: Double bottom pattern

Time frame: Daily

Observation:

The stock experienced a downward trend in January 2024, later forming a double bottom pattern on the daily chart. It broke out of this pattern in early September 2024 and has been moving upward since. If the breakout momentum holds, technical analysis suggests the stock may continue to rise further

It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Usha Martin Ltd.

Pattern: Parallel channel pattern

Time frame: Daily

Observation:

The stock has been trading within a parallel channel on its daily chart for an extended period. In August 2024, it touched the channel's support line and managed to stay within the pattern. After moving along the support line for a few sessions, the stock gained upward momentum, backed by substantial trading volume. According to technical analysis, if this momentum persists, the stock may see further upward movement. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Alkyl Amines Chemicals Ltd.

Pattern: Triple bottom pattern

Time frame: Daily

Observation:

The stock experienced a downward trend since 2021 but stabilized in March 2024, forming a triple bottom pattern on the daily chart. In the first week of September 2024, it broke out of the pattern, supported by strong trading volume, and began moving upward. As per technical analysis, if the stock can sustain this momentum, it may see further upward movement. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: TVS Supply Chain Solutions Ltd.

Pattern: Inverse head and shoulders pattern

Time frame: Daily

Observation:

After its listing, the stock entered a downward trend. From January to September 2024, it formed an inverse head and shoulders pattern on the daily chart. On 5th September 2024, the stock broke out of the pattern with strong trading volume, and has since moved upward with continued volume support. If it maintains this momentum, technical analysis suggests that the stock may see further upward movement. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Honasa Consumer Ltd.

Pattern: Cup and handle pattern and retest

Time frame: Daily

Observation:

Since its listing in November 2023, the stock has experienced upward momentum. From January 2024, it stabilized and formed a cup and handle pattern on the daily chart. A breakout occurred on 26 August 2024, supported by high trading volume. Though the stock has seen retest after the breakout, it was able to sustained the breakout level. In last 2-3 trading sessions, it has moved slightly higher. According to technical analysis, if the stock gains further momentum, it may continue its upward movement. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: SBI Cards and Payment Services Ltd.

Pattern: Double bottom pattern

Time frame: Daily

Observation:

The stock had been in a downtrend for some years now. It has stabilized between January and September 2024, forming a double bottom on its daily chart. It broke out from this pattern on 03 September 2024 with significant volume. A subsequent confirmation came with a strong green candle and higher volume. If the stock maintains its current momentum, it may continue to rise further according to technical analysis. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Gujarat State Petronet Ltd.

Pattern: Resistance breakout

Time frame: Weekly

Observation:

The stock has faced strong resistance around the 380 level since August 2021. Between February and April 2024, it attempted to breach this resistance but failed, strengthening it further. However, towards the end of August 2024, the stock successfully broke through with high trading volume, and the following week's candle confirmed the breakout. According to technical analysis, the stock may continue moving upward if it maintains this momentum. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Aavas Financiers Ltd.

Pattern: Double bottom pattern and retest

Time frame: Weekly

Observation:

The stock experienced a downward trend starting in January 2022. Between April 2023 and June 2024, it formed a double bottom pattern on the weekly chart, followed by a breakout in June 2024. After an initial upward move, the stock retested the breakout level immediately. In the month of September, the stock has rebounded with strong volumes. If the current momentum holds, the stock may see further upward movement according to technical analysis. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

As we celebrate the auspicious arrival of Lord Ganesh, the god of new beginnings, a new company has made a noteworthy debut on the stock markets—Premier Energies Ltd, a name making headlines today. The company, with 29 years of experience in the solar industry, is primarily known as an integrated solar cell and solar module manufacturer.

Business Overview:

Premier Energies Ltd operates in various segments within the solar industry:

1. Manufacturing of Solar Photovoltaic (PV) Cells: These cells are the building blocks for solar modules, converting sunlight into electricity.
2. Manufacturing of Solar Modules: The company manufactures complete solar modules, which can be used in various applications.
3. Customized Solar Products: Premier Energies offers bespoke solar solutions tailored to customer needs, such as customized solar tiles.
4. EPC Projects Execution: The company undertakes Engineering, Procurement, and Construction (EPC) projects, providing end-to-end solutions in the solar sector.
5. Operation & Maintenance Services: They offer maintenance services for EPC projects, ensuring the optimal performance of solar installations.
6. Independent Power Production: Premier Energies also operates as an independent power producer, generating electricity from its solar assets.

Listing Performance:

Premier Energies Ltd’s IPO was priced at ₹450 per share, raising ₹2,830.40 crores, including a fresh issue of ₹1,291.40 crores. The IPO was heavily oversubscribed by 75 times, reflecting strong investor interest. The stock made a stellar debut, listing at ₹990 per share, a significant 120% premium over the issue price. It has since soared to ₹1,159.70, showcasing a remarkable performance within just four days of listing and creating a buzz in the market.

Post-Listing Scenario:

The company’s impressive market performance reflects the positive sentiment surrounding the solar industry, driven by increasing electricity consumption, a shift towards renewable energy sources, and supportive government policies. The solar sector, in particular, appears promising as the world transitions away from non-renewable energy.

What’s Next?

However, despite the current euphoria, the stock is trading at a high Price-to-Earnings (P/E) multiple of 225, suggesting that it may be overvalued at present levels. A rational approach for investors would be to add the stock to their watchlists and wait for market excitement to subside, allowing for a more reasonable entry point. As the broader industry dynamics remain favorable, Premier Energies Ltd is undoubtedly a stock to watch closely for potential opportunities in the future.

Stock name: Century Plyboards (India) Ltd.

Pattern: Cup and handle pattern

Time frame: Daily

Observation:

The stock has been on an upward trajectory since the post-Covid period. Between February 2024 and August 2024, it consolidated and formed a cup and handle pattern on its daily chart. On 26 August 2024, the stock achieved a strong breakout, supported by solid trading volumes. In the subsequent sessions, it successfully held the breakout level. According to technical analysis, if the stock can build on this breakout momentum, it may experience further upward movement. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Craftsman Automation Ltd.

Pattern: Cup and handle pattern and retest

Time frame: Daily

Observation:

The stock has been trending upward since its listing. Between December 2023 and August 2024, it formed a cup and handle pattern on the daily chart. On 26 August 2024, the stock broke out of this pattern, with the breakout candle accompanied by significant trading volume. After the breakout, the stock experienced a brief retest. Currently, the stock has rebounded successfully and resumed its upward momentum. Based on technical analysis, the stock may continue its upward movement. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.