Investors with medium-term perspective can consider buying the stock of OnMobile Global (Rs 207). After peaking out in July 2010, the stock started to decline and has been on long-term down trend since then. Medium-term trend is also down from its October 2010 peak of Rs 400. However, the stock found support at its long-term base range between Rs 180 and Rs 200 in early February and bounced up. It re-tested this support last week and is trying to rebound again. Daily moving average convergence divergence indicator has been displaying prolonged positive divergence since last November. Moreover, we notice there is an increase in daily volumes in the advance sessions during the past three weeks. The daily Stochastic Oscillator is also displaying a positive divergence indicating trend reversal.

The daily relative strength index has entered in to the neutral region from the bearish zone and weekly RSI is recovering from the oversold territory. The daily MACD has signalled a buy. Taking in to consideration the fact that the stock is at a significant long-term support band and the daily indicators are displaying positive divergence, we take a contrarian stance on the stock from a medium-term perspective.

We believe that OnMobile Global has the potential to rally higher to our price target of Rs 250 with a likely pause around Rs 230 in the medium-term. Investors with medium-term perspective can consider buying the stock with stop-loss at Rs 185.

Follow up – Nestle India (Rs 3647.5)

The stock has gained 5.3 per cent from our recommended price level in line with our bullish outlook.

We reiterate our medium-term bullish view with target of Rs 3,900 and revised stop-loss of 3,480.

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

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