Markets

Chart Focus: Alstom Projects – Sell 

Yoganand D. | Updated on January 30, 2011 Published on January 30, 2011

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Investors with medium-term perspective can consider selling the stock of Alstom Projects India (Rs 567.3). The company provides power equipment for utilities besides a range of services related to power generation to other industrial users.

The long-term uptrend which began in early 2009 appears to have ended after encountering resistance in the band between Rs 855 and Rs 875 in October 2010. Since then, the stock has been on a medium-term downtrend. While trending down, the stock conclusively breached its long-term up trendline around Rs 700 in November. Moreover, in early January 2011 it failed to surpass the resistance range between Rs 735 and Rs 750 and penetrated its moving average compression (21, 50, 200-day moving averages) around Rs 690.

The stock is currently trading well below these averages.

Last week reinforcing the downtrend, it tumbled 7 per cent accompanied with good weekly volume, emphatically breaking through a key support level of Rs 600.

The daily relative strength index is featuring in the bearish zone and weekly RSI has just entered into this zone from the neutral region. Similarly, daily moving average convergence divergence indicator is hovering in the negative territory and weekly MACD has entered this territory indicates downward momentum.

Our medium-term forecast on the stock is bearish. We believe that it has the potential to continue its downtrend until it reaches our medium-term target of Rs 480, with minor pause around Rs 525. Investors can consider selling the stock while maintaining a medium-term stop-loss at Rs 610.

Follow up – Ajanta Pharma (Rs 208.8)

The stock recorded an intra-week high of Rs 234.8 and started to decline to complete the week on a negative note by losing 3.5 per cent. However, the medium-term outlook remains bullish and we reiterate our buy recommendation with target and stop loss mentioned last week.

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

Published on January 30, 2011
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