JP Associates: Elliott wave counts and Forecasting.

Infrastructure conglomerate Jaiprakash Associates signed an agreement to sell its 74 per cent stake in a cement manufacturing unit in Bokaro to Dalmia Cement (Bharat) for a deal that values the entity at around Rs1,150 crore. The proceeds of the stake sale will help Jaiprakash Associates in its plan to cut the Rs60,000 croredebt on its books. It wants to slash debt by Rs15,000 crore by March end.

In a disclosure to bourses, Jaiprakash said it will sell its entire holding of 74 per cent in the Bokaro unit, of which Steel Authority of India owns 24 per cent, at Rs69.74 per share, which translates to about Rs690 crore for the stake.

"The above stake sale is subject to the approval of SAIL and such other approvals, as may be necessary from lenders of Bokaro Jaypee Cement and concerned authorities," Jaiprakash Associates said. Besides theequity investment, Dalmia Cement will also take over around Rs250 crore of debt attached to Bokaro Jaypee Cement, an executive associated with the deal said.

News always comes after prices have given a breakout and has started moving up which is very difficult for traders and investors to capture. To eradicate this problem it is necessary to use technical analysis and Elliott Wave theory to know the possible reversal before the news arrived. By using Elliott wave theory  one capture not only the reversal but also can forecast which is been shown in the below daily chart.

As per wave perspective, after completing wave a of one bigger degree at 36.50, prices then continued to move up in the form of wave b in which it is moving up in a double correction (a-b-c-x-a-b-c). Recently it completed wave x and has given a bullish breakout by crossing the upper downward sloping red trend line which opens positive possibilities and is now moving up in form of wave a.

In short, our bias for JP Associates is ………