Discover the secrets of
predicting stock moves with a powerful blend of fundamental analysis and
Elliott Wave Theory-based technical insights!
Fundamental
Analysis
Bharat Petroleum Corporation Limited (BPCL), India’s second-largest
public sector oil marketing company, is a key player in the nation’s energy
sector. With diversified operations and a focus on green energy, BPCL is
well-positioned for sustainable growth. In oil and Gas sector
BPCL
achieved a remarkable Return on Equity (ROE) of 34.07%, which exceeded industry
averages and demonstrated exceptional capital efficiency. In FY 2023-24, the
company's market sales increased by 4.33%, resulting in its highest-ever net
profit of ₹26,859 crore and a strong development trajectory.
With a
P/E ratio of 6.75, BPCL provides significant value when compared to its
industry peers, emphasising its growth potential. The P/B ratio of 1.84 is
competitive, indicating that BPCL's market valuation matches its asset strength
and profitability. Using these indicators, the present market price appears
justifiable and promising.
BPCL
increased market sales by 4.33% to 51.04 MMT, demonstrating strong operating
capability. Investments of ₹54,000 crore in petrochemical projects at Bina and
Kochi, together with a₹1.70 lakh crore CAPEX plan, will likely drive
continuous development. PSU OMCs now hold a 27.57% market share.
BPCL's
zero net-debt position and excellent ₹35,936 crore cash flow from operations
demonstrate its financial strength. A good debt-to-equity ratio ensures
liquidity to fund future expansion while maintaining operational efficiency.
With 112%
refinery capacity utilisation and innovative digital interventions such as
predictive analytics and artificial intelligence, BPCL beats industry
benchmarks in asset utilisation and operational efficiency.
BPCL's
free cash flow supports its large dividend payout of ₹42 per share, which is a
950% increase from FY 2022-23.
BPCL has
the highest gross refining margin among PSU OMCs, assuring profitability even
in uncertain markets. Its renewable energy aim of 2 GW by 2025 demonstrates its
dedication to sustainability.
Technical
Analysis (Elliott Wave analysis)
The
chart shows a clear three-wave structure labelled as A-B-C:
Wave
A: A strong upward movement that peaked around 2017-2018, marking the first
major advance from the long consolidation period.
Wave
B: A corrective phase from 2018 to early 2022, characterized by volatile
sideways-to-downward movement. This correction took the form of a complex
pattern with multiple swings.
Wave
C: The most recent and powerful upward movement starting from 2022, which has
reached new all-time highs around the ₹375 level. This wave shows the strongest
momentum of all three waves.
For
readers who are new to Elliott Wave analysis, this A-B-C pattern suggests we're
looking at a corrective structure rather than an impulsive one. In Elliott Wave
terms, corrective patterns typically indicate that the move might be part of a
larger pattern still unfolding.
In
this image, wave B has been labelled in more detail, showing a triangle pattern
(waves a-b-c-d-e):
· Wave (a): Initial decline from the 2017 peak
· Wave (b): A sharp rally in 2019
· Wave (c): Another decline forming the lower boundary of the
triangle
· Wave (d): An upward move that respects the upper boundary
· Wave (e): Final leg completing the triangle pattern in 2022
The
blue converging trend lines clearly show the triangle formation, which is a
common Elliott Wave pattern. This triangle acted as a continuation pattern,
leading to the powerful Wave C breakout in 2023.
This
chart demonstrates a classic example of how triangle patterns can precede
significant price movements in Elliott Wave analysis. The completion of the
triangle at point (e) signalled the end of the corrective Wave B and the
beginning of the powerful Wave C advance.
This
is a more detailed chart of BPCL focusing on Wave C and its internal structure.
After
completing the triangle pattern (Wave B), we can see Wave C unfolding as a
clear five-wave impulse structure:
· Wave (i): Initial sharp rally from the triangle completion
point
· Wave (ii): A shallow pullback, showing strong underlying
momentum
· Wave (iii): The longest and most powerful wave, which is
typical of third waves in Elliott Wave theory, reaching around ₹376
· Wave (iv): Current corrective phase, pulling back from the
peak
· Wave (v): Yet to fully develop
This
is a textbook example of how a strong impulse wave can develop after a triangle
consolidation pattern with clear wave subdivisions that follow Elliott Wave
principles.
This
chart of BPCL shows an important Fibonacci retracement analysis during Wave B's
triangle formation. Let me break this down clearly:
The
chart highlights three key Fibonacci levels:
· 0.00% at 199.00 INR
· 61.8% at 165.03 INR
· 100.00% at 144.04 INR
These
levels played significant roles during Wave (e) of the triangle and the
subsequent waves (i) and (ii):
1. Wave (e) found support near the 100% Fibonacci level
(144.04), which marked the completion of the triangle pattern.
2. Wave (i) rallied up to test the 0% level around 199.00,
showing the significance of this resistance level.
3. Wave (ii) retraced and found support near the 61.8%
Fibonacci level (165.03), which is a common retracement level in Elliott Wave
theory
This
is a textbook example of how Fibonacci retracement levels can act as important
support and resistance zones within Elliott Wave patterns, particularly during
corrective waves and subsequent impulse moves.
This retracement (stopping at 61.8%) is often seen in strongly trending markets. The subsequent rally after Wave (ii) confirmed the importance of the 61.8% level as a support zone.
Looking
at this detailed chart of BPCL's Black Wave (iii) and its internal structure,
Black
Wave (iii) itself subdivides into 5 smaller waves (labelled 1-5 in green circles
on the chart):
1. Wave ① green:
Initial thrust upward from around 165 levels in late 2023
2. Wave ② green:
A shallow pullback, demonstrating strong bullish momentum
3. Wave ③ green:
A powerful move up to around 340 levels, typical of a third wave within a third
wave
4. Wave ④ green:
Sideways consolidation period, maintaining most of the gains
5. Wave ⑤ green:
Final push to new highs around 370 levels
Green
wave 2 simple correction, whereas green wave 4 is a complex correction.
After
completing these five sub-waves, black wave (iii) ended and wave (iv) began,
which is currently showing a deeper correction compared to previous pullbacks.
The
deeper retracement in Wave (iv) correction suggests this is indeed a fourth
wave rather than a smaller degree correction.
Wave (iv) is unfolding as a
corrective A-B-C pattern: (complex internal structure)
Wave A: Initial decline from
the Wave (iii) peak
Wave B: Sharp but brief rally
to around ₹323, testing previous resistance
Wave C: Currently unfolding as
a five-wave declining structure (labelled 1-5):
Wave
C's five-wave subdivision suggests a complex correction is nearing completion. The
depth of this correction is appropriate for Wave (iv), as it's deeper than
Wave (ii) but hasn't violated Wave (i) high.
Wave C's third wave is
exhibiting a classic Fibonacci extension relationship:
Wave 3 has extended to the
161.8% Fibonacci extension level at 278.40 INR.
This is particularly
significant because:
1. The 161.8% extension is a normal target for third waves in Elliott
Wave theory.
2. The price reaching exactly this level (278.40) confirms the
wave count's validity.
This
textbook behaviour of Wave 3 reaching the 161.8% extension of Wave 1 helps
confirm we're correctly identifying the wave structure within Wave C of Wave
(iv). Such relationships are crucial for both wave counting confirmation and
potential reversal zone identification.
It cannot be confirmed yet that the fourth wave formation is complete,
as the fourth wave might develop into a flat correction. There is a possibility
that it could rise to retest the 308 level before reversing downward again.
OR,
We're in Wave 5 (green) of
Wave C (blue) of black Wave (iv).
The price may extend its
decline to reach the 242 level.
This level appears to be a
significant support zone where Wave (iv) could terminate.
Once black Wave (iv) is
complete, a reversal is expected to initiate black Wave (v).
Black Wave (v) would then
likely push to new highs above the previous peak.
Disclaimer:
I am not a SEBI-registered financial advisor. The analysis and views shared
here are purely for educational and informational purposes and should not be
considered as financial advice or investment recommendations. Trading and
investing in the stock market carry a high level of risk, and past performance
is not indicative of future results. Readers are strongly encouraged to consult
with a certified financial advisor or SEBI-registered professional before
making any financial decisions. I am not responsible for any losses incurred
based on the information provided.