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HSBC has left ratings unchanged on UltraTech Cements in Bombay Stock Exchange (BSE) 0.10%, following its second quarter earnings with a maintained price objective of Rs 2,440.

Based on the brokerage firm statement, as earnings for the quarter were in line with expectation, such factors like rich valuation, softening realization and over capacity remained a concern for the company.  

At present, price objectives suggests 39.2% downside from the previous levels. In addition, share prices settled at Rs 4,015.25, up 0.16% during the BSE close of trade.

Subsequently, UltraTechBSE 0.10% issued financial earnings before interest, taxes, depreciation and amortization (EBITDA) in the second quarter, with a separated basis of Rs 1,150 crore, up 14% from the same period in the prior year.

Analysts claimed that improvements in costs offset lower realization was relative to the Rs 1,130 crore expectation, suggesting 3% decline.

However, HSBC stated that the company’s management has declined to provide any guidance during the quarter, it seemed that there were downside risks seen on the company’s earlier guidance of about 7% after the disappointing growth in the current financial year.               

"We believe FY17 demand will come in the range of 5-6%. This still implies a robust demand growth for the remainder of FY17," said HSBC. 

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Analysts’ Recommendation

Several analysts have updated their price objective on HSBC Holdings’ shares. Based on the most recent broker reports on Wednesday, 4 analysts of which have given a “strong buy” rating on the stock, 0 analysts issued “buy” rating, 11 analysts set “neutral” rating, 3 analysts affirmed “sell” rating and 4 analysts gave “strong sell” rating.        

HSBC Holdings’ share price rallied 1.52% at the close of trading session, with an intraday high of 625.00. Meanwhile, about 31,731,161 shares were changed hands amid the last trading session.

The company posted a 50-day moving average of 584.93, and a 200-day moving average of 496.90, with a market cap of 111.12 billion. It posted a 52-week low of 392.37, and a 52-week high of 626.30.

Current Stance of HSBC Shares

The chart below illustrates HSBC stock’s movement amid the recent quarterly earnings report of the company.

Meanwhile, market players were given signal to perform Buy position on the trend’s third candle, which in fact did rally in a light trading volume, reaching a peak level of 624.90 on October 18.

In essence, price movement nearly touched the support level, suggesting either a breakout or a false one in the next session.     

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Conclusion

Given the potential breaking out of the next candle, we conclude that the shares could fall into break out as today’s session had almost touched the support level. In addition, it is likely that earnings report would affect the price movement.  

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