Chart Focus - Sintex Industries: Buy

Yoganand D | Updated on November 15, 2017


Investors with medium-term perspective can consider buying the stock of Sintex Industries (Rs 83.3). After the stock peaked out in November 2010, it has been on a long-term downtrend. The stock resumed its downtrend after encountering significant resistance in the range between Rs 185 and Rs 190 in July 2011. It was on an intermediate-term downtrend until it found support at Rs 58 to Rs 62 zone in December 2011. But the stock changed its direction prompted by positive divergence in daily relative strength index as well as moving average convergence divergence indicator and the weekly RSI is reaching the oversold territory. Since its December low, the stock has been on a budding short-term uptrend. On Friday, the stock rose 5.8 per cent, decisively penetrating its 50-day moving average. Further, it is hovering well above both its 21 and 50-day moving averages. We observe that there has been an increase in volumes since January 10. The daily RSI has entered in to the bullish zone and weekly RSI is on the brink of entering in to the neutral region from the bearish zone. The daily MACD is moving higher in line with the stock price and is likely to enter in to the positive territory. Daily price rate of change indicator is featuring in the positive terrain indicating buying interest.

Taking a contrarian stance on the stock, we are bullish on it from a medium-term perspective. We believe the stock has the potential to continue its bullish momentum and trend upwards to reach our price target of Rs 100. But, we don't rule out a minor pause around Rs 90, while trending up. Investors with a medium-term perspective can consider buying the stock in declines with deeper stop-loss at Rs 72.

Follow up – SAIL (Rs 105.1)

In line with our expectation, the stock moved northwards in the previous week. It gained almost 15 per cent. We reiterate out buy recommendation in the stock with price target and stop-loss mentioned in the previous week.

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

Published on January 29, 2012

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