Autoline Industries – Buy

Yoganand D BL Research Bureau | Updated on July 12, 2011


Investors with medium-term perspective can consider buying the stock of Autoline Industries (Rs 168.4), auto parts manufacturer. After encountering long-term resistance at Rs 280 in November, the stock changed its direction and started to decline. It was on an intermediate-term downtrend until it found support in the band between Rs 120 and Rs 125 in this March. This support band is significant from a long-term perspective. In late May, this support band cushioned the stock and halted further decline. It again took support from this band on June 20 and bounced up subsequently. On June 23, the stock emphatically broke through its intermediate-term down trend-line and its 21 and 50-day moving averages by gaining 6 per cent. It then went on to sky-rocket 15 per cent on Friday. We notice that there has been an increase in volumes over the past four trading sessions. The 14-day relative strength index is featuring in the bullish zone and weekly RSI is inching higher in the neutral region towards the bullish zone. Daily moving average convergence divergence indicator has signalled a buy and is entering in to the positive territory. The daily price rate of change is hovering in the positive terrain and weekly price rate of change has just entered this terrain signifying buying interest. We are bullish on the stock from a medium-term perspective. However, in the near-term the stock can witness a corrective decline as it has rallied sharply last week. Therefore, investors can make use of such declines for buying.

We believe that Autoline Industries has the potential to trend higher in the medium-term and reach our price target of Rs 200, following a small pause around Rs 186. Investors with medium-term perspective can consider buying the stock with deeper stop-loss at Rs 147.

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

Published on June 26, 2011

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