Investors with medium-term perspective can consider buying the stock of construction contractor BL Kashyap and Sons (Rs 24.6). The stock had reversed from its significant long-term resistance level of Rs 50 in October and December 2009, making this level a major hurdle. Moreover, in September 2010, the stock once more peaked out after testing this key level. Since then, the stock was on an intermediate-term downtrend until it found support at its key long-term base zone between Rs 19 and Rs 20 in mid-March 2011. The stock, however, changed its direction triggered by positive divergence displayed in the daily relative strength index as well as moving average convergence divergence indicator. Last week, the stock rallied, breaching its intermediate-term down trend line emphatically and is trading well above its 21 and 50-day moving averages. We observe that there has been an increase in daily volumes over the past six trading sessions. The 14-day relative strength index which determines the speed and alteration of price movements is featuring in the bullish zone and weekly RSI has entered in to the neutral region from the bearish zone. The daily MACD has signalled a buy and is heading towards the positive territory. Price rate of change indicator is hovering in the positive zone signalling buying interest. 

We are bullish on the stock from a medium-term perspective. We believe that BL Kashyap and Sons has the potential of treading higher until it reaches our price target of Rs 30 in the medium-term, following a minor halt around Rs 27. Investors with medium-term perspective can consider buying the stock with stop-loss at Rs 21.5. 

Follow up – Voltas (Rs 178.1) 

In line with our expectations, the stock climbed higher gaining almost 4 per cent last week. We reiterate our medium-term bullish forecast on the stock with target and stop-loss mentioned in the previous week.  

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

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