SMS Pharma

The counter after forming a base around 85 levels commenced its uptrend. It found resistance around 110 levels and gave correction phase. During today's session it formed a strong bullish candle on a daily chart and gave powerful close above 100 levels. The decent surge in volumes during recent past combined with other technical indicators it seems that bulls are all charged up to challenge 110 levels. Aggressive traders can bet on the counter for short term perspective for the TGT of 120-125 with SL of 96.

D-Link India

 The counter took a nosedive after kissing 250 mark. During last week it formed a Doji candlestick pattern on a weekly chart with the burst of volumes suggesting the bears power getting exhausted. The counter started the week on a very positive note and it formed a strong bullish candle on a daily chart. Looking at other technical indicators and the chart formations on daily as well as weekly time frames we are of the opinion that the counter may witness bounce back. Traders can utilize every decline towards 80 levels as good buying opportunity with closing SL of 74 for the TGT of 100-108 in a short term.

Essar Shipping : Let us sail the momentum

The counter witnessed a very sharp correction after kissing 38 levels. Post correction it seems that it has formed a very strong base around 22 mark during recent past. Last week it formed a very strong bullish candle on a weekly chart and managed to give close above 28.5 levels. MACD crossover above Zero with RSI above 60 too suggests a very strong momentum. Traders can bet on the counter applying SL of 22 for the short term TGT of 36-40.

Relinace Infra : Technical View

The counter seems to have formed a very strong base around 550 levels on a weekly chart. It has been trading in the broader range of 550 to 635 for the last few weeks. As per the Fibonacci Tool it has been facing resistance around 61.8% level which seems to be placed around 620 levels. Deceive weekly close above 620 may provide the necessary fuel and the counter may kiss 670 to 700 mark.

Bata : Cup & Handle Break Out.

Bata remained under pressure after touching 750 level and posted low around 440 mark. It gained momentum from there and kissed 600 level and again entered correction phase. However the bears could not hold the counter at lower levels and again it started its upward journey and managed surpass 600 levels during last session. It witnessed gap up opening and traded with positive bias through out the session and the break of 600 level was well supported by decent volumes. It seems that the counter has gave a Cup & Handle break out on a daily chart and is expected to trade with positive bias in sessions ahead.

Gati : Will move at full Speed?

India's logistic sector perhaps is the most hot sector nowadays. The logistic companies are traded at P/E of almost 70x. The sector is buzzing for multiple reasons and most discussed is the GST. The sector is poised for accelerated growth for several broad reasons.

 Growth of the logistic sector is directly co-related with the economic activities. The past trend suggests that logistic industry grows at 1.5 to 2x of the GDP growth.

 Poor infrastructure (Railways, roads etc.) created the bottlenecks and stifled the growth of industry. But the government reforms and infrastructure ramp-up (e.g. metros) will address the issue.

Expected E-commerce market growth over the next few years is 25-30% CAGR. The main factors are internet penetration and urbanization.

India logistic spend is 13% of the GDP as compared to 7-8% of the developed countries.



And finally the implementation of the GST will be the game changer for the several organized logistic players.

Among many players we are discussing GATI which is one of the top five logistic service providers in India. The company has sound fundamentals and is currently trading at P/E of 43.3. The emphasis however in our analysis of the Company is more Technical than Fundamental. Along with other players GATI is also one of the buzzing stocks among the market participants. It has been witnessing quite higher volumes during recent past. It took a nosedive from 335 levels and posted a low around 95. It started steady recovery backed by huge volumes and now knocking its resistance level of 184. It formed a doji candle during previous session and started today's session with gap up opening which remained unfilled through out the session suggesting strong bull power. Strong close above 184 may add fuel and the counter may touch 215-225 levels in no time. Reasonable SL for this volatile counter is below 157 which is its recent swing low.

Tamilnadu Newsprint & Paper : Flag Pattern

Flag Chart Pattern: A short term continuation pattern.

The counter commenced its uptrend from around 185 levels and kissed 271 and witnessed healthy correction. It witnessed gap up opening from 255 levels and posted fresh high of 291.9. Since then it has been consolidating in a broader range of 260 to 290. Today the counter managed to break the said range and gave a powerful close above 290 mark. The counter has developed a typical Flag Pattern on a daily chart. Today's move was supported by heavy volumes and there is Bullish cross over of MACD above zero line. Other indicators too looking quite bullish we expect the counter to commence its fresh trend from here.

Theoretically the length of the Flag Pole is applied to the break-out level to determine the advance. So in our case the length of the Flag Pole is 50 points (i.e. 290-240) which can be applied to break-out level which is Rs.290. So the Target comes around 340. Reasonable stop loss is Rs.275 on a closing basis.

Nocil : Comprehensive View

Nocil has been in the Rubber Chemical business for over the last 4 decades. It is the largest rubber chemical manufacturer in India. The company offers wide range of rubber chemicals and major customers of the company are tyre companies like Apollo Tyres, Ceat Ltd, MRF Ltd etc. NOCIL has set up new manufacturing facility at Dahej in Gujarat, with a much improved process technology to strengthen its position in the field of Rubber Chemicals. The said facility has started its commercial operations in FY 2012-13. The performance of Rubber Chemical Industry is largely dependent on the the performance of tyre and automobile Industry. 

The growth prospects for Rubber Chemicals are likely to be centered in the Asia Region. There are huge investments done by the tyre companies around Asia-Pacific Region. Over the last 3-4 years, the global rubber chemical industry has seen many large manufacturers restructuring their businesses and has strategically exited their rubber chemical operations. Many small players had to shut down their operations. This is due to high competition from China and Korean players as they customers. The gradual realignment of supply and demand due to restructuring / exits from rubber chemicals business have ensured that there is a greater awareness amongst customers of the need for stable and quality supplier like NOCIL. Also, major MNCs are trying to de-risk their supply chain by diversifying raw material procurement away from China. As risk associated with Chinese exports increase, MNCs are increasing preferring India amongst the developing countries for raw material supply. 

The company witnessed major turnaround in its financials in the year 2015 where it posted sales growth of more than 20% and Operating profit jumped by more than 90%. Though Sales declined in 2016 by 50 basis points Net Profit jumped by almost 37%. With crude oil prices expected to remain under pressure in near future the company is expected to maintain its high operating profit margin. 

We recommend 'Accumulate' rating on the counter on the basis of following Investment Rationale.

1. The company belongs to Arvind Mafatlal Group which has rich experience in Chemical Industry. 

2. The company has a long track record, established Brands and enjoys largest market share in the Rubber Chemical.

3. Operating Profit margin improved substantially and is expected to sustain at higher levels.

4. The company has reduced its debt significantly which in turn will improve the net profit margin.

5. The new plant at Dahej has reached 80% capacity utilization and is quite cost-effective.

6. Favorable government policies and strong government support for R&D.

7.Eastward shifting of Global Chemical Industry.

Valuations:   We expect the company to grow its sales at CAGR of 14% over FY17 & FY18. We expect PAT of Rs.86.9 cr and Rs.95 cr for the FY17 & FY18 respectively applying CAGR of 10.54%. At current market price of 60.25 the stock is trading at FY17 PE of 11.15x & FY18 PE of 10.21x. Recommend Accumulate on the stock with price TGT of 88.5 (15x of FY18 EPS)

Technical Outlook

The counter has managed to give a very powerful close above 60 levels with decent surge in volumes. On a daily chart it has been trading above its short term as well as long term moving averages. Across time frames i.e. Monthly, Weekly & Daily there is Bullish MACD crossover above Zero line which is a very positive signal. Other technical Indicators too looking quite bullish it is expected to show strength in near term. Technically as long as 52 level is not breached on a closing basis the view remains bullish.