Tata Metaliks- Buy

Yoganand D BL Research Bureau | Updated on November 15, 2017


Investors with medium-term perspective can consider buying the stock of Tata Metaliks (Rs 65.9). The stock changed direction is early January this year after registering a 52-week low at Rs 51. This reversal was helped by significant long-term support around Rs 50 and prolonged positive divergence in daily as well as weekly indicators. In the first week of January the stock zoomed 37 per cent with extraordinary weekly volumes. However, after encountering resistance at Rs 77, the stock began to move sideways in a wide range between Rs 64 and Rs 77. The stock's lower boundary at Rs 64 has been constantly providing support. It is currently testing the lower boundary and finding base at this level. The stock's daily Bollinger Bands is moving closer to the average signalling reduction in volatility. Moreover, the stock is currently hovering around the lower boundary of the Bollinger Bands indicating an oversold position.

Both daily and weekly relative strength indices are featuring in the neutral region. The daily as well and weekly price rate of change indicators are about to enter positive terrain. Though the stock is moving sideways, we take a contrarian stance on the stock considering the above stated bullish facts. We believe that the stock has the potential to rally to its upper boundary of Rs 77 in the medium-term, with minor pause at around Rs 72. Investors with medium-term perspective can consider buying the stock with deeper stop-loss at Rs 59.

Follow up – Bombay Dyeing (Rs 579.8)

In line with our expectation, the stock advanced almost 8 per cent or Rs 42, accompanied by good weekly volumes last week. We reiterate our medium-term bullish outlook on the stock with a price target at Rs 620 and revised stop-loss at Rs 520 levels.

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

Published on April 01, 2012

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