Today's Opening - 673
Today's High - 675
Today's Low - 663
Today's Closing - 670
Three consecutive days of marginal positive closing but weak volumes. This is not a good indication.
The 2-day Relative Strength Index has broadly remained above 30 since 29th Oct 2018. The closing has been below the 5-day Exponential Moving Average level since 12th Nov '18.
The 12, 26-day Moving Average Convergence Divergence has remained negative since 4th Jan. However, it's been hovering around zero since 11th Mar. The 10-day Rate Of Change too has been moving closer to zero since 29th Mar.
The 20-day Commodity Channel Index though still negative has reached its highest level since 25th Mar. The Positive Directional Index has been stronger than the Negative Directional Index since 29th Mar.
The 2-day Relative Strength Index has broadly remained above 30 since 29th Oct 2018. The closing has been below the 5-day Exponential Moving Average level since 12th Nov '18.
The 12, 26-day Moving Average Convergence Divergence has remained negative since 4th Jan. However, it's been hovering around zero since 11th Mar. The 10-day Rate Of Change too has been moving closer to zero since 29th Mar.
The 20-day Commodity Channel Index though still negative has reached its highest level since 25th Mar. The Positive Directional Index has been stronger than the Negative Directional Index since 29th Mar.
Corporate Activity:
The company closed the last fiscal with a robust 11 per cent growth, despite strong headwinds faced by the Indian automotive industry during the year.
India's automotive sector is set to embrace its biggest challenge yet in less than an year's time when they begin to rollout Bharat Stage VI (BS-VI) compliant vehicles. In previous instances, manufacturers were allowed to exhaust their stock of older generation inventory, well after the onset of the new emission standards. However, this is for the first time that the auto industry will follow a sales-bound rather than production-bound deadline. This means that if the government, as committed to the Supreme Court, decides April 1, 2020 as the deadline for rollout of BS-VI standard, the automakers will have to stop selling existing BS-IV vehicles and switch to BS-VI (India has skipped BS-V) overnight.
This aside, under Phase-2 of Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME-II), the direct subsidy to manufacturers is for vehicles that will be used for commercial application and not for personal use. Removal of subsidy for personal cars will lead to a direct price spike of Rs 1.2-1.5 lakh for the end customers. Personal cars constitute 90 per cent of the 3.3 million passenger vehicles sold during the last fiscal.
Demand from commercial buyers such as Uber and Ola has been on a declining trend as increased vehicle supply has hit earnings of operators. Given the reluctance of commercial drivers to switch to Electric Vehicles (EV's), this segment won't churn out enough sales to make business a viable option in the medium term.
Nevertheless, although miniscule to the conventional petrol and diesel space, almost every manufacturer has declared plans to deploy EV's in their line-up this year.
All in all, the Indian passenger vehicle market will be hugely action-packed over the next 12-18 months, just enough to push the under-prepared ones out of the market and hail arrival of the hitherto unrecognized players.
India's automotive sector is set to embrace its biggest challenge yet in less than an year's time when they begin to rollout Bharat Stage VI (BS-VI) compliant vehicles. In previous instances, manufacturers were allowed to exhaust their stock of older generation inventory, well after the onset of the new emission standards. However, this is for the first time that the auto industry will follow a sales-bound rather than production-bound deadline. This means that if the government, as committed to the Supreme Court, decides April 1, 2020 as the deadline for rollout of BS-VI standard, the automakers will have to stop selling existing BS-IV vehicles and switch to BS-VI (India has skipped BS-V) overnight.
This aside, under Phase-2 of Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME-II), the direct subsidy to manufacturers is for vehicles that will be used for commercial application and not for personal use. Removal of subsidy for personal cars will lead to a direct price spike of Rs 1.2-1.5 lakh for the end customers. Personal cars constitute 90 per cent of the 3.3 million passenger vehicles sold during the last fiscal.
Demand from commercial buyers such as Uber and Ola has been on a declining trend as increased vehicle supply has hit earnings of operators. Given the reluctance of commercial drivers to switch to Electric Vehicles (EV's), this segment won't churn out enough sales to make business a viable option in the medium term.
Nevertheless, although miniscule to the conventional petrol and diesel space, almost every manufacturer has declared plans to deploy EV's in their line-up this year.
All in all, the Indian passenger vehicle market will be hugely action-packed over the next 12-18 months, just enough to push the under-prepared ones out of the market and hail arrival of the hitherto unrecognized players.
Stock Outlook:
I had mentioned in my post on 1st Mar that Mahindra and Mahindra was in a non-decisive zone. The stock needed one strong positive closing supported by good volumes to breakout of the bearish zone. I had mentioned about the stock having a strong support at 612-615 levels. In case of a rise, the stock had a resistance at 712-715. I had recommended to keep accumulating on dips as the downside risk seemed limited.
The stock indeed exhibited low risk by building a good support at 651 level but the highest that the stock has risen to was only 704 on 18th Mar. The stock is still continuing in a non-decisive zone, however few of the technical indicators are exhibiting a changing pattern. The stock still needs 1-2 strong positive closings with good volumes to breakout of the bearish phase that has seen the stock drop by almost 13% over the past six months. With 651 as the support, the stock has an immediate resistance at 689-694, post which it can run up to 704-709. I still recommend to keep accumulating on every dip as the downside risk seems limited.
The stock indeed exhibited low risk by building a good support at 651 level but the highest that the stock has risen to was only 704 on 18th Mar. The stock is still continuing in a non-decisive zone, however few of the technical indicators are exhibiting a changing pattern. The stock still needs 1-2 strong positive closings with good volumes to breakout of the bearish phase that has seen the stock drop by almost 13% over the past six months. With 651 as the support, the stock has an immediate resistance at 689-694, post which it can run up to 704-709. I still recommend to keep accumulating on every dip as the downside risk seems limited.
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