The stock zoomed seven per cent accompanied by good volumes in the previous week, backed by better than expected June quarter results. It registered its all-time high at Rs 183 on July 27. The stock took support in the base zone between Rs 135 and Rs 140 in May 2012 and resumed its long-term uptrend that has been in place since its 2008 low at Rs 43. Since then it has been on a medium-term uptrend. Last week’s rally broke through a key resistance at Rs 174. Moreover, the stock is trading well above its 50- and 200-day moving averages. Both daily and weekly relative strength indices are featuring in the bullish zone. The daily moving average convergence divergence indicator has signalled a buy and is hovering in the positive territory. Weekly MACD is also hovering in the positive territory implying upward momentum. The daily as well as weekly price rate of change indicators are featuring in the positive terrain implying buying interest.

We are bullish on the stock from a medium-term perspective. We believe that Ambuja Cements has the potential of rallying higher to our price target of Rs 210 with a likely pause around Rs 200 in the medium-term. Investors with a medium-term horizon can consider making use of any dips to buy the stock while maintaining stop-loss at Rs 165.

(This recommendation is based on technical analysis. There is a risk of loss in trading.)

(This article was published on July 29, 2012)
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