Mphasis completed its cycle wave on Apr 17, 2023 with double bottom and bullish hammer. The rally following this completed wave (i) of its new primary wave 1. Today the stock touched low of 1843 marking 50% retracement with completion of intended wave structure and an exhaustion gap on June 6, 2023.
Post this, the powerful wave 3 should begin. Though the wave (ii) structure is completed, with upward bias, every fall hereafter, if at all, would be a perfect opportunity to accumulate. Stock should ideally have fallen to 1803, if it fails to fall further, upward bias will be confirmed.
Targets 2180, 2414 in short to medium term. I am opening long with 6-12 months target.
Alternative confirmations : 1. June 23 Call OI max at 2000, next highest, almost half of 2000 OI, at 1900. Puts highest OI at 1800 2. P/E Ratio of 21, RoCE 30%, RoE 20%. PEG 1.47 (high in ind). 5 Yr. CAGR : Revenue 15.8%, EBITDA 16.2%, PAT/EPS 14.4%. Interest expenses negligible (low gearing). Dividend yield 2.6 (lower than ind but higher than Nifty 50). 3. P/E not higher than that of Industry. P/B superior to comparable peers. Profit growth superior to much larger players. 4. Institutions holding 38.7%, and FIIs 17.7%. 5. No major chunks of disposal by insiders (employees, of ESOP) is noticed. 6. Median deliverable volumes seem to be 40%+, not indicating only speculative counter. 7. Covered by quality research firms - 17 reports, 8 analysts with avg. target 2200 - covered by BoB, ICICI, HDFC. 4 Buy, 4 Neutral, 0 Sells, 1 upgrade. 8. July and Aug. Futures at normal premium.
Concerns: 1. High beta, 1.33. 2. FIIs pared stake by 1.17% in current quarter (seems profit booking, domestic MFs raised 0.55%) 3. June Futures small negative basis.
Overall, the stock is in the perfect buy zone, to start accumulating. I have opened fresh long positions.
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.
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An important price point was 1903.25, where only one close and few wicks on 1minute TF was noticed yesterday, today it crossed that price point multiple times and holding above it comfortably. This negates the possibility of the current advancing wave as wave 4 of previous downward impulse, that is evaluated to have already ended. The upside projections and wave numbering remains valid.
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- First minute wave, completed, second wave started, expected to fall to 1873 to 1858. Long theory still valid.
- Swing trading basis rejection of 1914.05 and 200 EMA (on hourly TF) seems a valid confirmation for short traders.
Let's see who wins, atleast on short term, on longer durations, the long theory remains valid and live.
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Seems to be striving to achieve its downward goal of 1803 before starting its up journey.
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Comment: - broke out of 200 DEMA, monthly & Qtly R1 and weekly R5 in previous session with high momentum and very high volume. Currently monthly R3 rejected. - on lower TF, decently holding up above the confluence of 2 bearish and 2 bullish channels (4 channels confluence is interesting) - similar volume was seen on 29.3.23 leading to a nerly 300 pts rally in 2 months. before that this type of volume was seen in 2021
Key watch: - 2230.25 important resistance to cross and hold. - in past reacted sharply to monthly R2. So holding up above or near monthly R1 2090 is important. - fall below 2065 first warning sign with SL to be adhered to
risks: 1. if daily volume nears 1 MM with high bearish momentum, may indicate this could be a fake breakout
Conclusion: Likely to consolidate between 2060 & 2200 for few days before advancing towards its next target.
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Trailing SL activated at 50% retracement of any swing in 15M TF
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Target revised to 2381 (basis adjusted data), seems to have almost achieved, good to exit
Trade closed: target reached
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Almost touched upper channel, wave counts suggest completion, though may extend. 1 hour shooting star and 15M shooting stars, with falling volumes suggest impeding weakness. Residual upside to residual downside too low to remain in trade. Foregoing some profits and exiting.
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Forgot to mention, this was completion of minute wave 3, stock should oscillate between 2080 & 2380 for a month. Longs not desired. Good strategy seem to be shorting options, shorting straddle without any hedge, though risky, appropriate delta and gamma hedge to be brought in suiting investing style and propensity to take risk. Results were discouraging, which supports exiting decision.
Wave 3 was quicker, so wave 5 may be protracted.
Trade active
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Minor wave 3 is extending, first minute wave of this minor completed on 25 Aug marking high of 2491. Now entered minute wave (ii) with downward target 2035. Currently wave (a) of this wave (ii) is in progress with downward expected aim of 2185. After hitting low of 2035 (if it does go to that level, may not fall due to upward bias), we might see a very strong wave upwards which should be both powerful, steady and supported by good volumes.
Pattern is almost complete, can be considered as fully completed. The target of 2630 is achieved (short by thin margin). I had given target of 2718 which had to be revised to 2631. If it crosses 2631 by some decent margin, say Rs. 100 or more then it should target 3000, which I am not much hopeful about. Upon completion of pattern today, a complete retracement of this first intermediate wave will be due. Challenge loving traders may close longs, to wait for re-entry. I expect a long protracted corrective intermediate wave 2 and could erase more than 61.8% gains - 1850 or even lower (I would list out reasons later, mostly stemming from fundamental side.)
Price point of Rs. 2040 mentioned in comment on 28 Oct as top of minor wave 1, should be read as 1986.75 (Dividend adjusted), I looked at unadjusted number, overlooked. Apologies. Currently this wave is not breached, so wave labeling remains as it is.
Gjain75
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Also, it’s a great buy opportunity, for traders, with a strict stop loss of 2035. Time horizon for exit, could be 6-12 months
Gjain75
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While it is holding above 2040, the fury with which current wave has advanced so far, is a warning for weak and short term investors. While the long term story is intact, consistently falling quarterly EPS hurts sentiments about growth. While it can be blamed on overall weak markets, this isn’t a usual characteristic of wave 4. I was expecting a triangle if a swift achievement of wave 5 was target. It appears that even though it May prevent sizeable downside, it might consolidate in a range for long time.
Gjain75
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2040 important level to watch. If retracement is below this level, even a wick, then the current falling wave might become wave C of larger correction, returning after hitting 50%. Important to hold above 2040 to continue with impulse structure, which is making wave 4.
Gjain75
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Just for clarity, since the tracking of waves is done in real time markets, not historical ones alone, you may often observe the wave labelling and targets changing, labelling of the most recent comments would hold precedence over its earlier reference. It isn’t easy to track waves in a moving market.
Gjain75
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@Gjain75 pls read “priority” in place of “precedence”
Gjain75
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The uptrend is not yet interrupted, it reacted to the 50% retracement of larger downswing which should have been expected. Dojis suggesting indecisiveness as to whether to hold the uptrend or reversal has started. The volumes during this uptrend is 30% of the previous cycle wave, in about 25% of the time, which gives me confidence about bullish sentiment. The only thing hitting under the belt is the much widening gap between cmp and DCF based forward valuation(basis next quarter estimates only). 200 DEMA seems to be resisting the fall. Also, the eBecs bet would take shape in few years, not in immediate quarters. As such the short term sentiment may shadow the growth expectations. In the scenario of falling EPS over past quarters, a higher EPS than estimated would support and vice Versa. I would prefer to hold opening new longs until next quarter results, wait for market reaction to it then ride the correction for fresh long entries. I don’t have any long positions as of now, so wouldn’t comment on existing positions. Since the market structure isn’t broken yet, there seems to be no reason to liquidate. I haven’t done detailed analysis of other parts, as part of my 22 point checklist process as I don’t have any positions as of now and my trading is on halt. I would request TV community to add their views and suggest corrections or improvements, it’s becoming only a monologue and am not being in advisory business here, but for own trading, so am little discouraged to post further. I would sincerely appreciate community interactions for each other’s benefit.
Gjain75
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Forgot to add, it’s acquisition of eBECS is quite well planned and aligned to larger canvas strategy, gaining a wide addressable market using platform of Microsoft 365, with nice idea on offerings. This stock should be charm to hold if the leadership can beautifully execute what it intends to. Execution, execution, execution!
Gjain75
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Interesting to read the interview of CEO of Mphasis reported in Livemint 11 June. I am extremely bullish on AI becoming far more bigger than human imagination. Businesses are going to need it more than anything else in future for survival itself. Good part is that the company doesn’t intend to compete with ChatGPT rather use it as their own enabler. Smart way to grow faster.