Today's Opening - 650
Today's High - 652
Today's Low - 641
Today's Closing - 650
I am writing on this stock for the first time ever.
After a negative closing yesterday, flattish closing today with volumes on the higher side on both the days. This is not a good indication.
The closing has been below the 5-day Exponential Moving Average level since 1st Jan. The 2-day Relative Strength Index too has remained below 50% since 1st Jan.
The Negative Directional Index has been stronger than the Positive Directional Index since 1st Jan. The 20-day Commodity Channel Index has been negative since 2nd Jan.
The 12, 26-day Moving Average Convergence Divergence has remained negative since 4th Jan. The 10-day Rate Of Change has been positive this entire week, this is the only silver lining for this stock.
Corporate Activity:
Tractors contributed to 36% of M&M's revenues in Q3 2019. In the 2019 budget, the government has agreed to form Pradhan Mantri Kisan Samman Nidhi to provide an assured income support to the small and marginal farmers. Under this scheme, farmers who hold not more than two hectares of land will get direct income support of Rs 6,000 per year. As per the 2015-16 Agriculture census, the average operational landholding in India is 1.08 hectares. Therefore, as many as 12 crore farmer families are expected to benefit from this scheme. Following the support scheme, the demand for tractors, especially small capacity tractors, is likely get a boost. Any boost to the tractor segment would translate into gain for the leader M&M who has a 40% market share.
Coming to the Electric Vehicles (EV) segment, M&M is the biggest manufacturer in India. M&M has signed a MoU with Thane Municipal Corporation to set up fleet of EV's. The high cost notwithstanding, several municipal corporations are adopting green mobility for the future. In addition, private transport companies that have got license to operate in cities are also gradually shifting to zero emission vehicles. Mahindra has not been able to expand beyond the capacity of producing more than 1,000 electric three-wheelers, primarily because of limited supply from its parts suppliers. It will take 4-6 months for them to increase the production capacity at the plant.
In the passenger segment, M&M has a portfolio of successful products such as Scorpio and XUV500 in the utility vehicle (UV) segment. The refreshed Pulse XUV500 and newly launched Marazzo have been well received in the market. The new product - XUV300 - had already reported 3,000 pre-bookings two weeks back.
After years of struggling in the two-wheeler market, the launch of Jawa range of retro-looking medium capacity motorcycles has been a big hit for M&M. The company has declared a total stock out for nine months for the Jawas, thanks to the unprecedented bookings turnout. The impact is also seen in its competitor Royal Enfield's YoY sales drop for three months in a row, marking its slowest growth pace in more than 12 years.
Stock Outlook:
Having lost more than 13% over the past three months, Mahindra & Mahindra seems to be in a non-decisive zone. The stock needs one strong positive closing supported by good volumes to breakout of the current zone. The stock has a strong support at 612-615 levels. In case of a rise, the stock has an immediate resistance at 712-715, followed by 738-740 as the next resistance. Keep accumulating on dips as the downside risk seems limited.
Today's High - 652
Today's Low - 641
Today's Closing - 650
I am writing on this stock for the first time ever.
After a negative closing yesterday, flattish closing today with volumes on the higher side on both the days. This is not a good indication.
The closing has been below the 5-day Exponential Moving Average level since 1st Jan. The 2-day Relative Strength Index too has remained below 50% since 1st Jan.
The Negative Directional Index has been stronger than the Positive Directional Index since 1st Jan. The 20-day Commodity Channel Index has been negative since 2nd Jan.
The 12, 26-day Moving Average Convergence Divergence has remained negative since 4th Jan. The 10-day Rate Of Change has been positive this entire week, this is the only silver lining for this stock.
Corporate Activity:
Tractors contributed to 36% of M&M's revenues in Q3 2019. In the 2019 budget, the government has agreed to form Pradhan Mantri Kisan Samman Nidhi to provide an assured income support to the small and marginal farmers. Under this scheme, farmers who hold not more than two hectares of land will get direct income support of Rs 6,000 per year. As per the 2015-16 Agriculture census, the average operational landholding in India is 1.08 hectares. Therefore, as many as 12 crore farmer families are expected to benefit from this scheme. Following the support scheme, the demand for tractors, especially small capacity tractors, is likely get a boost. Any boost to the tractor segment would translate into gain for the leader M&M who has a 40% market share.
Coming to the Electric Vehicles (EV) segment, M&M is the biggest manufacturer in India. M&M has signed a MoU with Thane Municipal Corporation to set up fleet of EV's. The high cost notwithstanding, several municipal corporations are adopting green mobility for the future. In addition, private transport companies that have got license to operate in cities are also gradually shifting to zero emission vehicles. Mahindra has not been able to expand beyond the capacity of producing more than 1,000 electric three-wheelers, primarily because of limited supply from its parts suppliers. It will take 4-6 months for them to increase the production capacity at the plant.
In the passenger segment, M&M has a portfolio of successful products such as Scorpio and XUV500 in the utility vehicle (UV) segment. The refreshed Pulse XUV500 and newly launched Marazzo have been well received in the market. The new product - XUV300 - had already reported 3,000 pre-bookings two weeks back.
After years of struggling in the two-wheeler market, the launch of Jawa range of retro-looking medium capacity motorcycles has been a big hit for M&M. The company has declared a total stock out for nine months for the Jawas, thanks to the unprecedented bookings turnout. The impact is also seen in its competitor Royal Enfield's YoY sales drop for three months in a row, marking its slowest growth pace in more than 12 years.
Stock Outlook:
Having lost more than 13% over the past three months, Mahindra & Mahindra seems to be in a non-decisive zone. The stock needs one strong positive closing supported by good volumes to breakout of the current zone. The stock has a strong support at 612-615 levels. In case of a rise, the stock has an immediate resistance at 712-715, followed by 738-740 as the next resistance. Keep accumulating on dips as the downside risk seems limited.
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