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Investors with medium-term perspective can consider buying the stock of JSL Stainless (Rs 103.9), an integrated steel producer. In September 2010, the stock encountered significant long-term resistance and started to decline. It was on an intermediate-term downtrend until March 2011 trough. After retracing 50 per cent Fibonacci retracement level of its prior up move between December 2008 and September 2010, the stock took support at around Rs 80 in March. This level is also a key long-term support . However, the stock changed its direction triggered by positive divergence in daily moving average convergence divergence. Since March, the stock has been on a medium-term uptrend. It recently found a near-term support at around Rs 96 and resumed its medium-term uptrend. On July 8, the stock jump more than 7 per cent with good volumes, emphatically breaking through its long-term resistance at Rs 100. Moreover, this up has also breached its 200-day moving average. The 14-day relative strength index has entered in to the bullish zone and weekly RSI is on the brink of entering into this zone from the neutral region. Daily MACD is featuring in the positive territory and weekly MACD is on the verge of entering this territory implying upward momentum. Both daily as well as weekly price rate of change indicators are featuring in the positive terrain indicating buying interest.
Our medium-term forecast on JSL Stainless is bullish. We believe that the stock has the potential of prolonging its current up trend until it reaches our medium-term price target of Rs 120 with minor pause at around Rs 112. Investors with medium-term perspective can consider buying the stock with stop-loss at Rs 95.
Follow up – Pantaloon Retail (India) Rs 324.4
The stock advanced Rs 6 or 1.8 per cent with good volume in the previous week. We reiterate our medium-term bullish outlook on the stock with price target and stop-loss mentioned last week.
(This recommendation is based on technical analysis. There is a risk of loss in trading.)
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