Technical Analysis of Rangpur Foundry Limited on 13 Jan 2017

Technical Analysis of Rangpur Foundry Limited on 13 Jan 2017

This is no buy/sell recommendation - just a trial to see if Technical Analysis (works to an extent) in Dhaka Stock Exchange.

Although quite a number of shares are showing weakness in structure, the Index is not yielding. It is unleashing weapons after weapons from its armory to keep moving higher. It even has a few trump cards up its sleeves as in large caps (including a few MNCs).

It is becoming risky to open new positions. But as I mentioned in my previous article, I will try to develop a scenario for RFL. http://imti77az.blogspot.com/2017/01/market-has-gone-berserk.html

Fundamental Analysis: Coming back to RFL – many of its shops can be seen across Dhaka City. Business should be good. But reported profit seems lower than what I expected as a layman.

It is reporting around 10% annual growth in profits and EPS. But is has consistently given at least 20% Cash Dividends, which I like.

	2013	2014	2015	1H '16
Profit	28	32	36	19.1
EPS	2.80	3.20	3.59	1.91
Dividend	22%C	22%C	23%C	12%C (I)
NOCFPS	2.5	4.4	1.7

Free float ~ 4 Mn Shares.

PE is very high at 42 – does not seem to be a stock for Fundamental Analysts.

So now let us look at the Technicals: I am a bit late with the analysis. RFL has moved fast on High Volume. It has already crossed its 3 year High of 126.6 and also crossed 5 year high of 132.

Such a share is good from a Technical Perspective in that it has hardly any overhead Resistance – Sky is the Limit! With the current bullish trend in the market, RFL would be a “risky” buy!

I am expecting it to retrace to around 128 level before its makes its next up move to the 150’s. If it goes below 123, then the pattern might fail.

*(Note: TA is not a Science; it works 60-70% of the time so don’t be hooked on to the exact numbers – please allow some flexibility).

Stop loss would be 113.

Let us see what unfolds . . .