Last Updated on Feb 3, 2022 by Aradhana Gotur

This article is authored by Kunal Rambhia, a fund manager at The Streets. He has been in the equity market since 2010, performing various roles such as Associate Research Analyst, Research Analyst, and Associate Portfolio Manager. He has media appearances with CNBC and ET NOW. Kunal is also a visiting faculty in multiple colleges.

EV is the new talk of the town. We have been hearing a lot about this new theme of investment lately. But Amara Raja Batteries has been underperforming for quite a long time. Let’s take a deep dive to understand formations and see whether it’s worth keeping on the radar.

Kindly note that most of the technical charts are higher timeframe charts. Consider this as an investment theme.

Monthly Log Chart: Simple Trendline

During earlier years of listing, this battery manufacturing stock remained sideways and then it entered a trending phase. After multiple declines in the last 17-18 yrs, a reliable trendline has come up. The stock has just reached the same support zone after the recent correction. Prices may take support at the same zone.

Monthly Log Chart with Fibonacci Retracement

After the massive advance of prices from Rs. 17 (after all adjustments) to approx. Rs. 1,100 in 6 yrs, the stock witnessed profit booking. Price corrected from the highs to 350 zone (almost 70% from the peak). The retracement is been 61.8% of the last advance. Prices are hovering between 50% to 61.8% zone for long. Such consolidation after massive decline is hinting towards a ‘potential bottom zone’ in place. 

Monthly Log Chart: Time Cycle

Price advanced from the lows of March 2009 to the highs of August 2015. We could see 77 monthly bars in between lows and highs. Since August 2015, we saw a correction. But on the log scale, it clearly shows sideways correction. The ongoing monthly candle is just turning up the 77th candle. There seems to be a brighter possibility of time correction coming to an end and a new rally ‘may’ emerge. 

Weekly chart with Fibonacci Retracement

After multiple declines in the past 6 yrs, the most recent advance and decline brought prices back to 61.8% of the most recent advance. Prices are consolidating near 61.8% retracement for 9 weeks. The last candle looks like a doji (or even hammer), just like 5 candles behind. On the daily chart, this looks like a possible double bottom formation, which highlights the possibility of limited downside.

Daily chart

Price seems contracting in action. The first decline was of 30%, followed by approx. 20% and then 11%. Contraction is forming a falling-wedge like formation. The most recent formation looks like a curve formation with multiple equal bottoms, confirming limited downside (as supported by other formations too).

Daily chart with Ichimoku

Price consolidation has brought Tenkan & Kijun Sen very closer with almost crossover. Future cloud is turning thin with Span A turning a bit higher. The most recent attempt was done by the price to surpass cloud, but that turned into a failure. On price-cloud crossover alongside Span A and Span B Crossover, this lagging indicator of technical analysis will give its thumbs up.

Daily chart with RSI

Lastly, the daily chart is showing curve formation (as discussed earlier) with higher RSI bottoms, confirming positive RSI divergence. This again highlights the positive reversal on cards. 

Putting it all together

After studying monthly chart cycles and retracements, weekly trends with the most recent decline, daily chart formations, Ichimoku and RSI indicators, we can conclude the limited downside and potential turnaround may be around the corner. 

Statutory Disclosure: Kindly note that this update is only for educational purpose. It is safe to assume my personal position, my fund’s position, my clients’ position and my relatives’ position may be open in the counter. Prefer to take the advice of your financial advisor before initiating any position.

Kunal Rambhia

14 Comments

  1. , pertaining to the closure orders from Andhra Pradesh Pollution Control Board (APPCB), for the Company’s Plants situated at Karakambadi, Tirupati and Nunegundlapalli Village, Chittoor District, Andhra Pradesh. We would like to inform you that the hearing was held today i.e January 25, 2022 instead of yesterday i.e. January 24, 2022 and the Hon’ble High Court of Andhra Pradesh has extended the interim suspension of said closure orders of APPCB. The next hearing is scheduled on February 03, 2022. , For Amara Raja Batteries Limited

  2. Sub, pertaining to the closure orders from Andhra Pradesh Pollution Control Board (APPCB), for the Company’s Plants situated at Karakambadi, Tirupati and Nunegundlapalli Village, Chittoor District, Andhra Pradesh. We would like to inform you that the hearing was held today i.e January 25, 2022 instead of yesterday i.e. January 24, 2022 and the Hon’ble High Court of Andhra Pradesh has extended the interim suspension of said closure orders of APPCB. The next hearing is scheduled on February 03, 2022, For Amara Raja Batteries Limited

  3. , pertaining to the closure orders from Andhra Pradesh Pollution Control Board (APPCB), for the Company’s Plants situated at Karakambadi, Tirupati and Nunegundlapalli Village, Chittoor District, Andhra Pradesh. We would like to inform you that the hearing was held today i.e January 25, 2022 instead of yesterday i.e. January 24, 2022 and the Hon’ble High Court of Andhra Pradesh has extended the interim suspension of said closure orders of APPCB. The next hearing is scheduled on February 03, 2022. For Amara Raja Batteries Limited

  4. to the closure orders from Andhra Pradesh Pollution Control Board (APPCB), for the Company’s Plants situated at Karakambadi, Tirupati and Nunegundlapalli Village, Chittoor District, Andhra Pradesh. We would like to inform you that the hearing was held today i.e January 25, 2022 instead of yesterday i.e. January 24, 2022 and the Hon’ble High Court of Andhra Pradesh has extended the interim suspension of said closure orders of APPCB. The next hearing is scheduled on February 03, 2022. The copy of the order is awaited. We further wish to inform that there is no loss on account of this disclosure. We would like to reiterate that the Company has always placed highest priority on the environment, health and safety of its workforce and communities around it. We take this opportunity to once again thank all our stakeholders who reposed faith in us and we will continue to strive to meet all their expectations. We request you to take on record the same. With Regards, For Amara Raja Batteries Limited

  5. Sub: Update – Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 This is further to our intimation letter dated 30″ April 2021 under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, update dated May 07, 2021, June 29, 2021, July 14, 2021, July 28, 2021, August 18, 2021, September 27, 2021, October 28, 2021, November 9, 2021, November 16, 2021, December 7, 2021, January 6, 2022 and Media Releases dated May 01 and May 09, 2021 respectively, pertaining to the closure orders from Andhra Pradesh Pollution Control Board (APPCB), for the Company’s Plants situated at Karakambadi, Tirupati and Nunegundlapalli Village, Chittoor District, Andhra Pradesh. We would like to inform you that the hearing was held today i.e January 25, 2022 instead of yesterday i.e. January 24, 2022 and the Hon’ble High Court of Andhra Pradesh has extended the interim suspension of said closure orders of APPCB. The next hearing is scheduled on February 03, 2022. The copy of the order is awaited. We further wish to inform that there is no loss on account of this disclosure. We would like to reiterate that the Company has always placed highest priority on the environment, health and safety of its workforce and communities around it. We take this opportunity to once again thank all our stakeholders who reposed faith in us and we will continue to strive to meet all their expectations. We request you to take on record the same. With Regards, For Amara Raja Batteries Limited

  6. Sub: Update – Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 This is further to our intimation letter dated 30″ April 2021 under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, update dated May 07, 2021, June 29, 2021, July 14, 2021, July 28, 2021, August 18, 2021, September 27, 2021, October 28, 2021, November 9, 2021, November 16, 2021, December 7, 2021, January 6, 2022 and Media Releases dated May 01 and May 09, 2021 respectively, pertaining to the closure orders from Andhra Pradesh Pollution Control Board (APPCB), for the Company’s Plants situated at Karakambadi, Tirupati and Nunegundlapalli Village, Chittoor District, Andhra Pradesh. We would like to inform you that the hearing was held today i.e January 25, 2022 instead of yesterday i.e. January 24, 2022 and the Hon’ble High Court of Andhra Pradesh has extended the interim suspension of said closure orders of APPCB. The next hearing is scheduled on February 03, 2022. The copy of the order is awaited. We further wish to inform that there is no loss on account of this disclosure. We would like to reiterate that the Company has always placed highest priority on the environment, health and safety of its workforce and communities around it. We take this opportunity to once again thank all our stakeholders who reposed faith in us and we will continue to strive to meet all their expectations. We request you to take on record the same. With Regards, For Amara Raja Batteries Limited

  7. Why no one is talking about their ban in Hyderabad ?
    Sub: Update – Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 This is further to our intimation letter dated 30″ April 2021 under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, update dated May 07, 2021, June 29, 2021, July 14, 2021, July 28, 2021, August 18, 2021, September 27, 2021, October 28, 2021, November 9, 2021, November 16, 2021, December 7, 2021, January 6, 2022 and Media Releases dated May 01 and May 09, 2021 respectively, pertaining to the closure orders from Andhra Pradesh Pollution Control Board (APPCB), for the Company’s Plants situated at Karakambadi, Tirupati and Nunegundlapalli Village, Chittoor District, Andhra Pradesh. We would like to inform you that the hearing was held today i.e January 25, 2022 instead of yesterday i.e. January 24, 2022 and the Hon’ble High Court of Andhra Pradesh has extended the interim suspension of said closure orders of APPCB. The next hearing is scheduled on February 03, 2022. The copy of the order is awaited. We further wish to inform that there is no loss on account of this disclosure. We would like to reiterate that the Company has always placed highest priority on the environment, health and safety of its workforce and communities around it. We take this opportunity to once again thank all our stakeholders who reposed faith in us and we will continue to strive to meet all their expectations. We request you to take on record the same. With Regards, For Amara Raja Batteries Limited

  8. I saw in bse portal , all Hyderabad office are closed and hearing s going on in supreme Court for pollution …for long time

    • Sub: Update – Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 This is further to our intimation letter dated 30″ April 2021 under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, update dated May 07, 2021, June 29, 2021, July 14, 2021, July 28, 2021, August 18, 2021, September 27, 2021, October 28, 2021, November 9, 2021, November 16, 2021, December 7, 2021, January 6, 2022 and Media Releases dated May 01 and May 09, 2021 respectively, pertaining to the closure orders from Andhra Pradesh Pollution Control Board (APPCB), for the Company’s Plants situated at Karakambadi, Tirupati and Nunegundlapalli Village, Chittoor District, Andhra Pradesh. We would like to inform you that the hearing was held today i.e January 25, 2022 instead of yesterday i.e. January 24, 2022 and the Hon’ble High Court of Andhra Pradesh has extended the interim suspension of said closure orders of APPCB. The next hearing is scheduled on February 03, 2022. The copy of the order is awaited. We further wish to inform that there is no loss on account of this disclosure. We would like to reiterate that the Company has always placed highest priority on the environment, health and safety of its workforce and communities around it. We take this opportunity to once again thank all our stakeholders who reposed faith in us and we will continue to strive to meet all their expectations. We request you to take on record the same. With Regards, For Amara Raja Batteries Limited

  9. Thanks for the technical analysis. Hope it shows the moves pending from long time now.

    • S GUNASEKARAN Reply

      It is high time to strictly enforce the installation of Pollution TREATMENT AND RECYCLING PLANTS in place in all the loopholes and plug the ravages caused / likely to recur again to utmost safety standards so that no harm is done to anyone concerned. The Plants are not to be closed nor allowed to function sans safety equipment beIN put in place.

      It is to be applied to every plant in the country and the COURTS shall exercise the due care in every walk of it’s journey.

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