Asian Paints: More Colourful Rally Now Only Above 870 For 922

Technically, AP (CMP: 848) has now to sustain over 870 for an immediate to short term target of 890-910 & 922-930. In the mid to long term, only consecutive closing above 930, it may scale 950-975 & 1010-1050 in the mid to long term under bullish market scenario.

On the down side, inability to sustain over 870, might lead to selling in the scrip & below 855-850, it may fall to 835-819-799-775-755-745 area. Only consecutive closing below 745, AP may further fall to 730-718-702-692 territory in the worst bear case scenario.

In brief, for AP, 745-855-870-922 area might be the broad range in the near term.

Bottom Line: Technical Trading Levels (Positional)

	SL</>5	FROM SLR
		Asian Paints	CMP	848
			T1	T2	T3	T4	T5	T6	T7	SLR
Strong >	870		890	910	922*	930	950	975	1010-50	<865
Weak <	865		855-850*	835	819	799	775	755	745	>870

Asian Paints gives us a colourful rally amid Iran nuclear deal (possibility of lower crude oil price because of higher supply from Iran), strike called off by its TN plant workers (since April'28) & various expansion plans in Karnataka & AP (Southern states, where demand is growing exponentially due to rapid real estate development and land is not an issue there).

Looking ahead, due to expected overall economic recovery & higher infra spending along with affordable housing theme, we may see incremental higher demand for paints, specially after H2/2016 and Asian Paints should be one of the key beneficiary of that along with Berger Paints.

But as the Iran nuclear deal might be discounted already to a great extent, going by the time & price action of Crude oil (50-48$ is now strong demand zone) & relatively strong USD, raw material cost (Crude accounted for nearly 30% for paints) may not come down dramatically in INR terms in the near future. In any way, we may see full real impact of Iran deal in global crude demand/supply scenario only in H2/2016.

As par quick BG metrics, current valuation of Asian Paints may be around 800 & its projected fair valuation might be around 925-1010-1085 (FY:16-18).

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	LONG TERM	SHORT TERM	MEDIAN VALUE	200-DEMA	10-DEMA
ASIANPAINT	14.54	49.44	56.26	781.48	813.98	797.73	746.57	809.95

 

ASIANPAINT

19.51

58

56.26

905.24

942.88

924.06

746.57

809.95

   

ASIANPAINT

23.38

68.5

56.26

990.96

1032.17

1011.57

746.57

809.95

 

ASIANPAINT

26.9

80.55

56.26

1062.95

1107.15

1085.05

746.57

809.95

   All eyes will be now on 21-July, when Asian Paints will publish its Q1 result.