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Investors with medium-term perspective can consider buying the stock of Hitachi Home and Life Solutions (India) that closed at Rs 202.5. The company is a subsidiary of Hitachi Appliance Inc, Japan. It sells room air-conditioners and refrigerators with specialization in commercial air-conditioners. The stock has been on an intermediate-term downtrend from its lifetime high of Rs 402 marked in July 2010. However, after retracing 61.8 per cent Fibonacci retracement level of the stock's previous uptrend (from March 2009 to its life time high of Rs 402) the stock found support around Rs 170 in February 2011. The price band between Rs 170 and Rs 180 is a significant long-term support band for the stock. Triggered by prolonged positive divergence displayed in the weekly relative strength index and daily moving average convergence divergence, the stock changed direction. Moreover, it rallied breaching its 21- and 50-day moving averages and ended last week by jumping more than 13 per cent with good volumes. The daily MACD is on the verge of entering in to the positive territory. The 14-day RSI is heading towards the bullish zone in the neutral region and weekly RSI has entered in to the neutral region from the bearish zone. Daily as well as weekly price rate of change indicators are featuring in the positive terrain indicating buying interest.
We are bullish on the stock from a medium-term perspective. We believe that Hitachi Home and Life Solutions has the potential to trend northwards until it hits our price target of Rs 240, following a minor pause around Rs 225. Investors with medium-term perspective can consider buying the stock with stop-loss at Rs 184.
Follow up – Fedders Lloyd Corporation (Rs 78.2)
After climbing higher by 5.6 per cent to record an intra-week high of Rs 86.3, the stock turned volatile. Subsequently, it slipped 4 per cent for the week. However, we reiterate our medium-term bullish outlook on the stock with targets 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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