Dabur India Ltd. Target 820 Upside 53%
מעודכן
Basis wave theory:
Its making a diagonal triangle in its cycle V, of which it completed primary corrective wave 4 in the week of 23 oct. 23. Its previous cycle wave III was exaggerated at 4.618x, and cycle wave 5 was expected to end at 1x at about 627, it however exceeded that by narrow margin of little over 5% (peak 658). This overshooting, and non completion of pattern in the month of Sep.21, suggests that movement is not yet complete.
In current cycle, primary 2 was a zigzag and 4 is a horizontal triangle, fitting theory. Despite two divergences, primary 3 being less than 1.618 and shape being expanding wedge (not a contracting one), I am convinced on the pattern being a diagonal triangle.
Many iterations over the waves, fail to convince on a 5-3-5-3-5 wave structure, and all the factors are skewed towards a 3-3-3-3-3 structure, namely concluding wedge. Moreover, completion of a triangle on 26 Oct. 23, confirms that the final wave 5 has started / yet to start (so far, a satisfactory intermediate triangle completion suggests that final wave has started).
Final primary wave 5 targets 683, 727 / 812, while cycle V targets 820, a positive confluence. This final wave 5 should take a 3 wave structure ABC (not 5, while internal structure may be 5-3-5).
I recall that in very rare cases a diagonal triangle will fail to touch its upper (or lower in bearish case) boundary [while I may already be seeing one in case of ICICI Bank, only in few days/weeks that would be clear], in that case, an upward thrust is expected. Post triangle thrust suggests 683 as the target.
Completion of wave 4 is also confirmed by time, i.e. wave 3 primary was completed in about 2 years and current bearish / sideways phase also lasted for about 2 years, suggesting and end of bearish / sideways phase. Moreover, shooting far above the cycle trend channel, by all the 4 primaries, suggests shifting of base (inflation effect?) and higher tops than orthodox (even before onset of our dear friend Mr. Corona Virus)
Alternative confirmations / disagreements:
+ Triangle completion on 26 Oct. also made a double bottom (triple, more lavishly) within its local region.
+ 482-504 is a local demand zone, to which the stock reacted swiftly, it tapped this zone on 26th oct. and bounced (or bouncing) until it reaches supply zone of 600ish levels
+ The low of 504.1 which it touched on 26th Oct., was also a reactive level of 50% of the swing + starting from May 2019, (to which it had reacted swiftly twice)
+ PoC of entire bearish move from Sep 21, lies at about 562, and price dipping below VAL ,suggests it should attempt to touch that region again.
+ Bollinger band width has gained a positive slope after tapping its lift time bottom (a post triangle thrust generally is swift, so rising volatility is a good sign)
+ Weekly 200 EMA (523) strong rejection in week of 23rd oct and close above it in next week with a bullish candle
+ MFI returning from oversold zone
+ OBV tapped below its support levels, suggesting a reversal may be observed. Accu/Dist on a rising trend.
+ Seems breakout out of Supertrend Sell boundary, with close above it, though with a small body
+ 2 closes above weekly R1, strong recovery from monthly and quarterly S2s with bullish harami and 2 closes above quarterly S1 (also weekly P).
+ Barring one occasion in past, whenever it dipped into quarterly S1, a strong rally followed (over weeks), this time its returning from a prominent bruise i.e. dipping below quarterly S2.
[-] Macd still bearish, on monthly TF, while on weekly it shows reduction in deceleration (may be its too early stage of reversal, or correction may elongate if this doesn’t prove to be bullish reversal)
[-] Monthly RSI not giving any signal (ideally, an oversold would have been good)
[-] Monthly, weekly ATR still sloping negative (positive slope would be good)
[-] Weekly still under ichimoku cloud, a penetration is expected as the cloud is narrowed.
[-] Still below middle line of Donchian channel (maybe its too early stage of reversal)
[-] Still below daily 200 EMA of 551
[-] Seems to be approaching its anchored Vwap of 555 (through which it slid rapidly)
[-] Break of structure / change of character is not yet observed, so strictly, opening long is not desirable, but am opening long, as the advance may be rapid and may not give good entry points with theoretical pullbacks
Fundamentals:
+ Large institutional brokers have given target of 600+, no sell or reduce ratings by anyone
[-] High TTM PEG ratio, though RoE of circa 20% is good to have.
+ PE of 54 (historical) seems overvalued, however post 2018, 50ish level seems to be good support
+ Forward two years earnings on growth side, though not very high (supportive of diagonal triangle theory), last two quarterly over 10% YoY growth in operating profit is comforting, maintaining OPM at 20% levels.
+++ Low debt , RoA of 12.5% is still very good (though it has fallen compared to past, quarterly improvements overscore this, atleast for the time being)
+++ Crisil AAA / A1+ - Top notch
+ Recent management interaction on how they are planning to improve their brand valuation, suggests that the company has now started taking falling performance seriously and working over it. So, growth may be expected over long run (though in short run, post diagonal, we would know who stays from old investors and who goes out).
[o] Fundamentals not repeated here, institutional brokerages have done good job in their reports
F&O / Insiders / Bulk / Shareholding / News / Management:
[-] Nov Futures at negative basis
[-] [-] PCR of OI very high at 1.05
+ No insider selling in about 2 years / no block/bulk for almost a year
++ No promoter disposals in last quarters, stays at ~66% and Zero Pledge
+ MF increased holdings by >1% ( [-] while FIIs reduced by almost same amount)
Conclusion : The Stock seems to be fulfilling the prophecies of a diagonal, and a thrust is suggested in high probability. Timelines are either by Aug.24 or by Jan 25 (one of the two)
NB – On fundamental side I am still relying heavily on analysts reports, given they are from proven good platforms, am yet to deep dive myself into it.
Disclaimer : The contents herein are my personal views, with an objective of seeking views and comments from traders community at TV. Nothing contained herein should be construed as an advice, offer, inducement or encouragement to buy or sell any shares, security, derivatives linked to the security, debt security or any other security of the company mentioned herein. The readers must make their independent assessment and evaluation of the company and its securities, and should take advice from their financial advisors before entering into making any financial decision, without relying on anything contained hereinabove, or views given as addendum or comments hereafter. The author shall not be responsbile or liable, directly or indirectly, for any loss or damage caused to the reader, or any other person or third party, whether pecuniary or otherwise, whether in present or in future.
Its making a diagonal triangle in its cycle V, of which it completed primary corrective wave 4 in the week of 23 oct. 23. Its previous cycle wave III was exaggerated at 4.618x, and cycle wave 5 was expected to end at 1x at about 627, it however exceeded that by narrow margin of little over 5% (peak 658). This overshooting, and non completion of pattern in the month of Sep.21, suggests that movement is not yet complete.
In current cycle, primary 2 was a zigzag and 4 is a horizontal triangle, fitting theory. Despite two divergences, primary 3 being less than 1.618 and shape being expanding wedge (not a contracting one), I am convinced on the pattern being a diagonal triangle.
Many iterations over the waves, fail to convince on a 5-3-5-3-5 wave structure, and all the factors are skewed towards a 3-3-3-3-3 structure, namely concluding wedge. Moreover, completion of a triangle on 26 Oct. 23, confirms that the final wave 5 has started / yet to start (so far, a satisfactory intermediate triangle completion suggests that final wave has started).
Final primary wave 5 targets 683, 727 / 812, while cycle V targets 820, a positive confluence. This final wave 5 should take a 3 wave structure ABC (not 5, while internal structure may be 5-3-5).
I recall that in very rare cases a diagonal triangle will fail to touch its upper (or lower in bearish case) boundary [while I may already be seeing one in case of ICICI Bank, only in few days/weeks that would be clear], in that case, an upward thrust is expected. Post triangle thrust suggests 683 as the target.
Completion of wave 4 is also confirmed by time, i.e. wave 3 primary was completed in about 2 years and current bearish / sideways phase also lasted for about 2 years, suggesting and end of bearish / sideways phase. Moreover, shooting far above the cycle trend channel, by all the 4 primaries, suggests shifting of base (inflation effect?) and higher tops than orthodox (even before onset of our dear friend Mr. Corona Virus)
Alternative confirmations / disagreements:
+ Triangle completion on 26 Oct. also made a double bottom (triple, more lavishly) within its local region.
+ 482-504 is a local demand zone, to which the stock reacted swiftly, it tapped this zone on 26th oct. and bounced (or bouncing) until it reaches supply zone of 600ish levels
+ The low of 504.1 which it touched on 26th Oct., was also a reactive level of 50% of the swing + starting from May 2019, (to which it had reacted swiftly twice)
+ PoC of entire bearish move from Sep 21, lies at about 562, and price dipping below VAL ,suggests it should attempt to touch that region again.
+ Bollinger band width has gained a positive slope after tapping its lift time bottom (a post triangle thrust generally is swift, so rising volatility is a good sign)
+ Weekly 200 EMA (523) strong rejection in week of 23rd oct and close above it in next week with a bullish candle
+ MFI returning from oversold zone
+ OBV tapped below its support levels, suggesting a reversal may be observed. Accu/Dist on a rising trend.
+ Seems breakout out of Supertrend Sell boundary, with close above it, though with a small body
+ 2 closes above weekly R1, strong recovery from monthly and quarterly S2s with bullish harami and 2 closes above quarterly S1 (also weekly P).
+ Barring one occasion in past, whenever it dipped into quarterly S1, a strong rally followed (over weeks), this time its returning from a prominent bruise i.e. dipping below quarterly S2.
[-] Macd still bearish, on monthly TF, while on weekly it shows reduction in deceleration (may be its too early stage of reversal, or correction may elongate if this doesn’t prove to be bullish reversal)
[-] Monthly RSI not giving any signal (ideally, an oversold would have been good)
[-] Monthly, weekly ATR still sloping negative (positive slope would be good)
[-] Weekly still under ichimoku cloud, a penetration is expected as the cloud is narrowed.
[-] Still below middle line of Donchian channel (maybe its too early stage of reversal)
[-] Still below daily 200 EMA of 551
[-] Seems to be approaching its anchored Vwap of 555 (through which it slid rapidly)
[-] Break of structure / change of character is not yet observed, so strictly, opening long is not desirable, but am opening long, as the advance may be rapid and may not give good entry points with theoretical pullbacks
Fundamentals:
+ Large institutional brokers have given target of 600+, no sell or reduce ratings by anyone
[-] High TTM PEG ratio, though RoE of circa 20% is good to have.
+ PE of 54 (historical) seems overvalued, however post 2018, 50ish level seems to be good support
+ Forward two years earnings on growth side, though not very high (supportive of diagonal triangle theory), last two quarterly over 10% YoY growth in operating profit is comforting, maintaining OPM at 20% levels.
+++ Low debt , RoA of 12.5% is still very good (though it has fallen compared to past, quarterly improvements overscore this, atleast for the time being)
+++ Crisil AAA / A1+ - Top notch
+ Recent management interaction on how they are planning to improve their brand valuation, suggests that the company has now started taking falling performance seriously and working over it. So, growth may be expected over long run (though in short run, post diagonal, we would know who stays from old investors and who goes out).
[o] Fundamentals not repeated here, institutional brokerages have done good job in their reports
F&O / Insiders / Bulk / Shareholding / News / Management:
[-] Nov Futures at negative basis
[-] [-] PCR of OI very high at 1.05
+ No insider selling in about 2 years / no block/bulk for almost a year
++ No promoter disposals in last quarters, stays at ~66% and Zero Pledge
+ MF increased holdings by >1% ( [-] while FIIs reduced by almost same amount)
Conclusion : The Stock seems to be fulfilling the prophecies of a diagonal, and a thrust is suggested in high probability. Timelines are either by Aug.24 or by Jan 25 (one of the two)
NB – On fundamental side I am still relying heavily on analysts reports, given they are from proven good platforms, am yet to deep dive myself into it.
Disclaimer : The contents herein are my personal views, with an objective of seeking views and comments from traders community at TV. Nothing contained herein should be construed as an advice, offer, inducement or encouragement to buy or sell any shares, security, derivatives linked to the security, debt security or any other security of the company mentioned herein. The readers must make their independent assessment and evaluation of the company and its securities, and should take advice from their financial advisors before entering into making any financial decision, without relying on anything contained hereinabove, or views given as addendum or comments hereafter. The author shall not be responsbile or liable, directly or indirectly, for any loss or damage caused to the reader, or any other person or third party, whether pecuniary or otherwise, whether in present or in future.
הערה
Just completed internal pattern, I have exited just now, to enter again at lower level. It should retrace to 518. If it doesnt, i will have to enter into long at higher price. Its trading, so would take that risk.עסקה פעילה
The bottom on April 15 seemed to mark the end of primary wave 4, and current up wave looks more like wave 3 of impulse of wave 5. Possibility of another drop is low, as wave 4 seems to have completed. More detailed analysis during weekend.
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