Bearish Harami Cross

Bearish harami cross is the bearish reversal candlestick pattern usually occuerd in the uptrend of the market.This bearish harami cross is the major trend reversal pattern more significant than bearish harami.In this pattern long white candle appears followed by doji.

 Acknowledging Criteria:
1. Financial market is in uptrend for long time.
2. We can see long white candlestick in the first day of the trade.
3. Then we see a doji appeared completely engulfed by the real body of the first day on the second day.

Definition
The Bearish Harami Cross Pattern is a sign of disparity about the market’s health. Market is bullish and strong buying continues as evidenced by the long, white real body but then we see the doji. This shows that the market may not continue in uptrend.

 Important Factors:

While the Bearish Harami Pattern is not a major reversal pattern, the Bearish Harami Cross Pattern is a major bearish reversal pattern. If a harami cross appears after a long white candlestick, longs should take notice of it since harami crosses call tops very effectively.

A confirmation on the third day is required to be sure that the uptrend has reversed. This confirmation may be in the form of a black candlestick, a large gap down or a lower close on the third day.

Gail Bullish Trend Formation

We have seen bullish trend reversal formation in the stock Gail India Ltd. As per the technical view bullish piercing line formed in this stock. This piercing line candlestick is strong high reliable bullish trend reversing pattern. Weekly chart indicates strong bullish candle morning doji star. It is also strong bullish trend reversing signal. Delivery volume also significantly high in last one month.
Above Rs.394 this stock will strong to reach higher price levels. Last Quaternary results of this stock also higher than expected performance.  This stock is having strong support at Rs.360.

For 3QFY2012, GAIL India (GAIL) reported a higher-than-expected performance. The company’s net sales, EBITDA and PAT increased by 34.6%, 34.6% and 12.8% yoy, respectively. During 3QFY2012, GAIL’s top line grew by 34.6% yoy to Rs 11,260cr, above our estimate of Rs 9,587cr, mainly due to strong growth in the natural gas trading, petrochemical and LPG segments. Gross revenue of the natural gas trading, petrochemical and LPG segments grew by 35.1%, 53.7% and 32.6% yoy to Rs 9,150cr, Rs 878cr and Rs 965cr, respectively. EBIT of the natural gas trading, petrochemical and LPG segments grew by 56.9%, 98.3% and 103.6% yoy to Rs 323cr, Rs 387cr and Rs 305cr, respectively. However, EBIT of the natural gas transmission and LPG transmission segments decreased by 6.7% and 8.2% yoy to Rs 621cr and Rs 78cr, respectively. Consequently, GAIL’s EBITDA increased by 34.6% yoy to Rs 1,795cr in 3QFY2012. Tax rate increased to 31.7% in 3QFY2012, compared to 28.1% in 3QFY2011. Consequently, net profit grew by 12.8% yoy to Rs 1,091cr, above our estimate of Rs 1,018cr.”

“The substantial capex slated ahead for transmission pipelines could see maximum capitalization on incremental gas production domestically. Also, any major oil/gas discovery could be a key catalyst for the stock. Over the last five years, GAIL has traded at an average one-year forward PE of 16.0x, while currently it is trading at PE of 12.0x FY2012E and 10.5x FY2013E. On P/B basis, the stock trades at 2.1x FY2012E and 1.8x FY2013E, compared to its five-year average P/BV of 2.7x. Further, considering the anticipated volume growth in the next two-three years.

We are recommending to buy this stock at price Rs. 390. Short term investor can book profit near to 415. Long term investor can hold this stock for the target upto 470.Please read our Disclaimer before investing.