8 mid-cap wonders

Technical Report

Ifhistoryisanyindication,midcapstockstendtosubstantiallyoutperformtheirlargecappeersinanybull
market.Thistimeitsgoingtobenodifferent.Inthepreviousbullmarketof200708,fromSeptemberslow
Niftydeliveredreturnsof43%whiletheCNXMidcapIndexoutperformedbysurging61%.Intherecentpast,
post the breakout in March 2014, CNX Midcap Index has delivered returns exceeding 37% surpassing its
previouspeakof2010.

Technically, in May 2014, CNX Midcap Index broke out from rising channel pattern on the monthly chart
whichhadbeenpersistingsince2011.Managingtocloseabovethesamewastheicingonthecake.Volumes
spurtalongwiththepriceupmovesuggestsbuyinginterestevenathigherlevels.Ontheupside,immediate
resistanceisseenaround12,200levelswhichshouldbetestedinthenearterm.Anycorrectionsintheinterim
shouldbetreatedasaretracementandinvestorsshouldusedeclinestoaccumulatethesestocks.

We have identified eight stocks from a technical perspective. These stocks have created a strong base and
witnessedaccumulationfollowingaprolongedperiodofdowntrendandarenowallsettoshoothigher.

Recommendationtable
Scrips
DenNetworks
DhanlaxmiBank
ErosMedia
ExideIndustries
HeidelbergCement
IndiabullsRealEstate
SobhaDevelopers
SyndicateBank

CMP(Rs)
235
54
186
144
59
93
467
157

Target(Rs)
315
71
240
175
85
125
560
205

%Upside
34.0
31.5
29.0
21.5
44.1
34.4
19.9
30.6

June03,2014

PriteshMehta,HadrienMendonca&HemantNahata
research@indiainfoline.com

ThisreportispublishedbyIIFLIndiaPrivateClientsresearchdesk.IIFLhasotherbusinessunitswithindependentresearchteamsseparatedby'Chinesewalls'cateringtodifferentsetsof
customershavingvaryingobjectives,riskprofiles,investmenthorizon,etc.Theviewsandopinionsexpressedinthisdocumentmayattimesbecontraryintermsofrating,targetprices,
estimatesandviewsonsectorsandmarkets.

8 mid-cap wonders

Den Networks Limited

AscendingTrianglebreakout:DenNetworks(Den)hitanintermediatelowofRs120inDecember2013,since
then the stock has been on a constant upmove with rising volumes. In this process, the stock formed an
ascendingtrianglepattern,whichisconsideredtobebullish.Denhadpreviouslymadeanattempttobreakout
from this triangle but it failed to sustain at higher levels. However, for the first time, following a long drawn
consolidation,Denisonthevergeofanascendingtrianglepatternbreakoutonthemonthlycharts.

WeadvicetraderstobuyDenNetworksaboveRs235forapotentialtargetofRs315,implyinganupsideof
34%.MaintainaStopLossofRs195.

DenNetworksmonthlychart
DEN [N17722] 223.75, 229.00, 209.45, 228.05, 1673172 2.79%
Price

Log

Onthevergeof
AscendingTriangle
Breakout

IRIS
380
360
340
320
300
280
260
240
220
200
180
160
140
120
100

80.00

60.00

40.00

Source : www.SpiderSoftwareIndia.Com
Vol

Lk
175
150
125
100
75.00
50.00
25.00

09:ND

10:J

11:J

Source:IRIS,IndiaInfolineResearch

12:J

13:J

14:J

Mon

8 mid-cap wonders

Dhanlaxmi Bank

Downwardslopingtrendlinebreakout
On the weekly chart, the stock has broken out from a downward sloping trendline since April 2011. The
breakout has occurred with higherthanaverage volumes after multiple failed attempts. Currently it is taking
supportabovethefallingtrendline.

Trianglebreakoutonthemonthlychart
Insecondhalfof2013,thestockbegantheprocessofgradualrecoveryafterbeingonadecliningcurvesince
2010. The stock has given a classic Ascending Triangle pattern breakout above Rs46. These patterns are
normallyseeninanuptrendsoweexpectthisstocktoresumetheprocessofrecovery.Also,thestockhasbeen
intheprocessofmakinghigherlowssincelastweekofMarchwhichsuggestsstrengthinthecurrentupmove.

Convergenceof100WMAanddownwardslopingtrendline
Support for the stock is placed at Rs45 i.e. the point of convergence of above mentioned trendline and 100
WMA.Applyingmovingaverageanalysis,astronguptrendispossible.BuyforatargetofRs71withstoplossof
Rs46.

DhanlaxmiBankweeklychart
DHANBANK [N11359] 46.00, 51.90, 45.50, 51.00, 8728629 13.33%
Price Avg(S,100)

Log

IRIS
140
120

Downwardsloping
trendlinebreakout

100
80.00

60.00

40.00

100WMA
Source : www.SpiderSoftwareIndia.Com
Vol

Cr

4.00

2.00

11:F M A

M J

O N D

12:J F M

Source:IRIS,IndiaInfolineResearch

M J

O N

D 13:J F M

O N

D 14:J F

M A

Wkl

8 mid-cap wonders

Eros Media

Longtermtrendreversal:ErosMediahadbeeninalongtermdecliningmodesinceDecembersince2011but
hasfinallyshownsomestrongsignsofreversal.Aturnaroundfromthedowntrendhasbeenconfirmedafter
thepricesurpassedthefallingresistancelineontheweeklychartinMay.

Pennant breakout: The current recovery process has seen the stock breaking out from a pennant pattern. A
descendingtrendlineextendedfromthepeakofRs195hasbeenpiercedontheupside,thusputtinganendto
theshorttermdowntrend.

Sustainingabovethebreakoutpoint:Currentlythestockistakingsupportatthetrendlinebreakoutpointand
alsosustainingaboveits100WMA,suggestingstrengthintheupmove.BuyforatargetofRs240withstoploss
ofRs159.

ErosMediaweeklychart
EROSMEDIA [N20080] 173.90, 179.00, 172.50, 176.70, 422622 2.55%
Price Avg(S,100) Avg(S,200)

Lnr

IRIS
300

Longtermtrend
reversal

250

200
2
150
3
Source : www.SpiderSoftwareIndia.Com
Vol

100

Lk

100

50.00

11:JA S

O N D

12:J F M

A M J

Source:IRIS,IndiaInfolineResearch

S O N

D 13:J F M

A M

S O N

D 14:J F M A M

Wkl

8 mid-cap wonders

Exide Industries

Longtermtrendbreakout:Thestockhasbrokenoutofthedownwardslopingtrendlinefromthehighof2010
suggestingstockisallpoisedtogetintounchartedterritoryinthecoming1218months.

Higher high and higher low: Exide was making a lower high and a lower low pattern even that has changed
recentlytohigherhighwithretracementbeinghigher.

Werecommendbuyingat144foratargetof166,175withastoplossplacedat129

ExideIndustriesweeklychart
EXIDEIND [N676] 141.50, 145.45, 140.50, 144.70, 3649877 2.95%
Price Avg2(E,13,E,26) Avg2(E,13,E,26)

Log

D0

D0

IRIS
186

Longtermtrend
reversal

180
174
168
162
156
150
144
138
132
126
120
114
108

102
96.00
90.00
84.00
78.00

72.00

66.00
Source : www.SpiderSoftwareIndia.Com
Vol

Lk
250
200
150
100
50.00

RSI(14,E,9)
75.00
67.50
60.00
52.50
45.00
37.50
09:J S

10:J F M

11:J F

Source:IRIS,IndiaInfolineResearch

12:J F M

13:J F M

14:J F

Wkl

8 mid-cap wonders

Heidelberg Cement

TriangleBreakout:Thestockisonavergeofa9yearsbreakoutpointofasymmetricaltriangleandlooksallset
tocrosspreviouspeakzoneofRs72.Thevolumehasbeenpickinguplatelyindicatingstrengthintherecent
uptrend.

Ridinginits3rdWaveontheweeklychart:Heidelbergcementseemstobecurrentlyintoits3rdwaveonweekly
chartbasis.Evenat2.618xextensionofthefirstwaveislikelytoseethestocktouching85levels.

Werecommendbuyingstockatcurrentlevelsandatdipstill54levelsforatargetof85withastoploss
placedat47.5onclosingbasis

HeidelbergCementweeklychart
HEIDELBERG [N2316] 56.00, 60.50, 56.00,
Price Avg2(E,13,E,26) Avg2(E,13,E,26)

60.05, 826585 7.14%

Log

IRIS
70.00
65.00

60.00
55.00
50.00
45.00
40.00
35.00
30.00
25.00

TriangleBreakout

20.00

15.00

10.00

Source : www.SpiderSoftwareIndia.Com
Vol

Lk

360
300
240
180
120
60.00

RSI(14,E,9)
80.00
70.00
60.00
50.00
40.00
30.00
04:FA M J A S O N D 05:J M A M J A S O N D 06:J M A M J J A S O N D 07:J M M J J A S O N D 08:J M A M J J A S O N D 09:J M A M J J A S O N D 10:J M A M J A S O N D 11:J M A M J A S O N D 12:J M M J J A S O N D 13:J M A M J J A S O N D 14:J M A M

Source:IRIS,IndiaInfolineResearch

Wkl

8 mid-cap wonders

Indiabulls Real Estate

Mutiplesupport:IndiabullsRealEstateonthemonthlychartlandedinmultiplesupportzonesituatedbetween
Rs4045153followingasharpdeclinefromRs299inOctober2009.

Resistanceturnsintosupport:Itfellbelowacrucialsupportof100WMAinNovember2010;andthatsame
movingaveragehasactedasastrongsupportbasetoascendhigherinthecurrentrecoveryprocess.

Breakout from a consolidation zone: It confirmed a breakout above Rs80 in May and closed above the
consolidationzonebetweenRs8040.Itgaveacloseabovethesameonmonthlybasisforthefirsttimesince
September2011,signifyingstrengthinthecurrentbreakout.IndiabullsRealEstateoffersanexcellentbuying
opportunityanditshouldbouncetowardstargetofRs125.MaintainaSLofRs79.

IndiabullsRealEstatemonthlychart
IBREALEST [N14450] 86.60, 94.50, 86.40, 92.35, 14300598 7.26%
Price

Lnr

IRIS

D0
340
320
300
280
260
240

Breakoutfroma
consolidationzone

220
200
180
160
140
120
100
80.00

25

60.00
Source : www.SpiderSoftwareIndia.Com

40.00

26

Vol

Cr
30.00
25.00
20.00
15.00
10.00
5.00

08:ND

09:J

M A

M J

10:J

M A

M J

Source:IRIS,IndiaInfolineResearch

11:J

M A

M J

12:J

M A

M J

13:J

M A

14:J

M A

M J

Mon

8 mid-cap wonders

Sobha Developers

Rising Channel Breakout: Sobha has been see sawing between a rising channel for almost 30 months. Since
hittingalowofRs180inDecember2011,Sobhahasbeenonconstantupswingandisgraduallyrisingtowards
the upper band of the trading range. The stock has made an attempt to pierce above the rising trendline,
howeveritfailedtosustainabovethesame.FinallySobhahasonceagainreachedazoneafterconsolidatingfor
almost30monthswherethestockhaspiercetheuppertrendline.SoacloseaboveRs467wouldmeanconfirm
abreakoutfromarisingchannel.

Duringthisprocess,Sobhahasmaintainedahigherandtophigherbottompatternwhichfurtheraccentuates
ourpositiveviewonthestock.

WeadvisetraderstoBuySobhaaboveRs467forapotentialtargetofRs560innearterm.Keepastoplossof
Rs430.50.

Sobhamonthlychart
SOBHA [N13826] 452.55, 463.90, 451.00, 456.80, 39306 1.50%
Price

Log

Onthevergeof
Risingchannel
breakout

IRIS
1800
1700
1600
1500
1400
1300
1200
1100
1000
900
800
700
600
500
400

300

200
1

100

Source : www.SpiderSoftwareIndia.Com
Vol

Lk
250

200

150

100

50.00

06:D 07:F A M J J A S O N D 08:J M A M J J A S O N D 09:J M A M J J A S O N D 10:J M A M J J A S O N D 11:J M A M J J A S O N D 12:J M A M J J A S O N D 13:J M A M J J A S O N D 14:J M A M J

Source:IRIS,IndiaInfolineResearch

Mon

8 mid-cap wonders

Syndicate Bank

Risingchannelbreakout:Onlagertimeframe,thestockhasbrokenoutfromarisingchannelpattern.Rising
trendlinedrawnfrom2007wasactingasastrongresistancewhichwassurpassedeffortlesslyincurrentquarter.

Bullish consolidation: After going through an extended phase of consolidation which lasted 7 years and
witnessinggradualupswingsandwhipsaws,SyndicateBankhasconfirmedabullishbreakout.

We advise traders to Buy Syndicate Bank for a potential target of Rs205, with an expected upside of 28%.
MaintainaStopLossofRs137.50.

SyndicateBankquarterlychart
SYNDIBANK [N7179] 96.55, 164.00, 93.30, 160.35, 141459408 66.86%
Price

Log

Risingchannel
breakout

IRIS
240
220
200
180
160
140
120

100
80.00
60.00
4
40.00

20.00

Source : www.SpiderSoftwareIndia.Com
Vol

Cr
17.50
15.00
12.50
10.00
7.50
5.00
2.50

99:D00:M

01:M

02:M

03:M

04:M

Source:IRIS,IndiaInfolineResearch

05:M

06:M

07:M

08:M

09:M

10:M

11:M

12:M

13:M

14:M

Qtr

Recommendationparametersforfundamentalreports:
BuyAbsolutereturnofover+10%
MarketPerformerAbsolutereturnbetween10%to+10%
SellAbsolutereturnbelow10%
CallFailureIncaseofaBuyreport,ifthestockfalls20%belowtherecommendedpriceonaclosingbasis,unlessotherwisespecified
bytheanalyst;or,incaseofaSellreport,ifthestockrises20%abovetherecommendedpriceonaclosingbasis,unlessotherwise
specifiedbytheanalyst

Publishedin2014.IndiaInfolineLtd2014

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