Stock Picks of the Day on August 09, 2018

UltraTech Cement: Buy| CMP: Rs 4,241| Target: Rs 4690| Stop Loss: Rs 3965| Return 11%| Timeframe 6 months

UltraTech Cement is the largest player in India with a capacity of ~96.5 MT and market share of over 23%. Within a secular up trend, the stock has undergone a secondary phase of correction.

The recent breakout from the downward sloping channel (as shown in adjacent chart) signifies termination of the secondary phase of consolidation that augurs well for the resumption of the primary uptrend, thereby providing a fresh entry opportunity.

The up move since March 2015 has been captured in a well-defined rising channel (drawn adjoining highs of 2015-16 high of Rs 3398–4130 and 2015 low of 2531).

After hitting a lifetime high (4600) in January 2018 the stock witnessed a gradual corrective decline and tested the lower band of the channel in June 2018.

Since then, the stock has formed a strong base formation around 3600 as it is the 61.8% retracement of the last major up move (3050-4600), around 3640.

The past three month’s price action resembles a Morningstar candlestick pattern on the monthly chart. The occurrence of Morningstar candlestick pattern at the lower band of rising channel shows base formation and accumulation by stronger hands that augur well for the resumption of the primary uptrend.

Time wise, during the recent up move, the stock retraced entire nine week’s decline (4175-3563) in just five weeks. The faster pace of retracement highlights robust price structure that bodes well for an acceleration of momentum, going ahead.

In a nutshell, we expect the stock to resume its primary uptrend and gradually head towards 4690 as it is implicated target of past three months consolidation (4160-3630). The immediate support is placed around | 3815 as it is 61.8% retracement of recent up move (3563-4230)

Yes Bank: Buy| CMP: Rs 382| Target: Rs 424| Stop Loss: Rs 356| Return 11%| Timeframe 1 month

The share price of Yes Bank was trading in a broader range of 275-383 over the past year. It took the shape of a contracting triangle pattern.

In July 2018 the stock recorded a breakout from contracting triangle pattern signalling reversal of the corrective trend and resumption of the fresh up move.

The corrective decline from the July 2018 high of 394 has found support around 360 levels being the confluence of the 50% retracement of the last leg of up move (327- 394) placed around 360 and the previous breakout area which is likely to reverse its role and act as support in the short term.

Among oscillators, the weekly MACD indicator is diverging from its nine-period average, indicating an acceleration of upward momentum.

We expect the stock to resolve higher from here on and gradually head towards 424 in coming weeks as it is the price equality of last up move 342-394, projected from a recent low of 357.

Sanofi India: Buy| CMP: Rs 6150| Target: Rs 6,995| Stop Loss: Rs 5,690| Return 14%| Timeframe 6 month

Sanofi India is a leading MNC in the domestic pharmaceutical market. SIL has two manufacturing sites (Ankaleshwar, Goa) and also exports to 48 countries.

The share price saw a major turnaround in March 2018 as it logged a resolute breakout from multi-year consolidation (3730–4940) during 2015-18.

Prices have been inching northward post retesting aforementioned breakout level (4720), suggesting renewed buying demand at elevated levels. The recent price activity signals an acceleration of upward momentum, providing a good entry opportunity to ride the next leg of the up move.

The stock has been forming higher peak and trough since September 2017. This overall price action has been captured in an upward sloping channel formation (drawn adjoining September 2017 to May 2018 lows of 3940-4720 and projected from January highs of 5151).

Recently, the stock has registered a breakout from the upper band of aforementioned channel backed by rising volumes, indicating an acceleration of upward momentum.

The key support base for the stock is around | 5690 region as it is the 38.2% retracement of the recent up move (4720 to 6298).

Based on the aforementioned technical evidence, we expect the stock to resolve higher from here on and head towards 6995 over the medium term being the measuring implication of the aforementioned rising channel (6050-5100=950 points) added to the higher band of the channel 7000 (6050+950=7000) corroborating with 161.8% extension of up move (3086 to 4950) projected from 3940, placed around 6955.